Submission on the National Minimum Wage

Studies by serious researchers on the effects of minimum wage policies, even when those researchers are personally and institutionally sympathetic to such policies, invariably conclude that the imposition of an effective minimum wage depresses employment levels below their natural level.

Of all the possible government policies that could serve to reduce poverty, raising the minimum wage is not one of them.

If a policy goal is to promote fair and effective competition in the labour market, the imposition of an effective minimum wage does the opposite.

When the minimum wage pushes many workers into the informal sector and renders less competitive those marginal workers who retain their jobs, it cannot be argued that the minimum wage promotes fair labour practices. Its general effect is to redistribute wage income from the lowest-paid workers to higher-paid workers, with a net loss from the social perspective. All of this begs the question: Why do minimum wage laws exist?


You can read the submission here.

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