Essay/Term paper: Minimum wage legislation

Essay, term paper, research paper:  Economics

Minimum Wage Legislation

I am going to pose the question to you the students of Sir Sandford Fleming
College, do you really want the minimum wage legislation left in affect? As
college students you are not benefiting or gaining anything from minimum wage
legislation. The minimum wage legislation requires all employees to be paid at
least some fixed given dollar amount per hour. This sounds good, but it isn't
all that it seems!

Minimum wage is an example of government intervention. The government has put a
minimum on the dollar amount that employers can pay their employees.
Unfortunately when we implement solutions like the minimum wage, it is too late
to actually fix the problem, so in most cases it has effects that we cannot
foresee as it is a reaction instead of a prevention method. Minimum wage
actually helps very few people. The only ones that benefit from minimum wage are
those unskilled workers who are currently employed. Minimum wage restricts
employment opportunities for the young, unexperienced, and those people with
educational disadvantages. They will continue to find themselves handicapped in
the job market as long as the minimum wage legislation remains in affect. In
society today the demand for "unskilled" workers is low and the supply is high,
therefore there is a surplus of unskilled workers in the job market. The effect
of a surplus drives down an individuals reservation wage, as they are willing to
do and take anything for work. Minimum wage only makes this fact more severe, as
it increases the supply of workers.

Minimum wage increases the cost of doing business, and unfortunately in today's
economic conditions employers are not able to pass on the extra costs to the
consumer. Minimum wage is not helping workers, it is hurting businesses, and to
maintain any profit, and follow legislation companies have to cut labour costs
somehow. Companies are being forced to take other alternatives because of higher
labour costs for unskilled workers. Businesses are forced to:

1. Cut back current employees hours
2. Not hire any more employees
3. Let employees go

As you can see the reactions to minimum wage actually decrease opportunities for
the "unskilled" workers, instead of providing them. With any change in the in
the minimum wage the demand will decrease/increase dramatically, and exactly the
opposite for skilled workers. When the minimum wage changes the demand for
skilled workers remains the same regardless, but if there is a change it is very
minute. Overall the amount of job opportunities are decreasing, because of the
costs of labour is increasing for the unskilled worker, and it will be the
unskilled workers who are the first to go in these situations because they do
not have the specialized skills that make them irreplaceable.

Wages are used to compensate workers for their time, skill, and money that they
have invested into themselves. The trend is for higher education, which in
return receives higher wages. The reservation wage of skilled workers is higher
then unskilled because they would like to receive some return on their
investment, their education. As college students we should be able to relate to
this concept as we have put more time, effort and money in to ourselves then
some others, like high school students and we should be compensated for this by
of course a better rate of pay. After one year of college you should receive
more then minimum wage as you have bettered your skills and invested at least
$3000 to do so. This is the only direct cost, you also have to take into
consideration the opportunity costs you would have. The opportunity costs for a
college student is the wages you could have been earning instead of attending
school as well as the time you could be travelling or starting a family, or
whatever you gave up to go to college, and you want to be compensated for them.

We would like to encourage more people into getting a better education, but
unfortunately minimum wage is working against us. The opportunity costs for some
people to attend college seems to high, so if we decreased minimum wage maybe
more people would attend college. This would help out people individually as
well as society, it would actually spread out the supply of labour a bit more,
and turn decrease the level of unemployment and poverty.

Wages are compensation for your skills, effort, responsibility, and working
conditions, and they should be rated and fluctuated by these categories.
Unfortunately minimum wage disregards all of this. Regardless of your education,
skills, effort, you can still receive minimum wage. Minimum wage is a fixed
dollar amount that is paid for many jobs that can not even be compared. Most of
these jobs should have different pay rates, especially when the degree of skill
is higher, but they don't.

The government keeps increasing minimum wage, and making it tougher on
businesses and at the same time discouraging unskilled workers from bettering
themselves, and for what. The economy is not booming, and even with increasing
minimum wage rates the economy is not seeing any extra money being put back into
circulation. As well, the higher minimum wage rate keeps raising the level of
unemployment. I feel that if we put the burden on the people of Ontario to be
and do the best they can that we would not need minimum wage. The skills that we
could produce would be widely demanded, so it would be to the benefit of many
other unskilled minimum wage earners to support the abolishment of minimum wage
legislation. You could receive better wages, and at the same time decrease the
unemployment rate.