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Hot Potato, Hot Potato And The Minimum Wage Debate

June 8th, 2017 | Posted by ATS in Economy | Minimum Wage | Time and Attendance Blog, Workforce Management Software

The recent announcements of a $15.00 per hour minimum wage in several jurisdictions across North America have left those for jumping for joy and those against it seething. On radio talk shows and, in online forums the debate is like a hot potato. At this point, both sides feel so strongly about their position on the matter, it’s unlikely they will engage in a healthy debate about the subject.

The arguments for and against the wage increase is far reaching.  One of the many groups against the wage hike is The Oakville Chamber of Commerce based, based on feedback from its members, and writes the following;

Chamber members share the Government’s desire for broadly inclusive growth. However, in order to achieve this, we need to ensure that we are not risking job losses, rising consumer costs, and economic hardship as a result of over-regulation.

The cost of all of these benefits will be borne by small business owners.  We believe the government has not yet fully understood the unintended consequences of these changes.   Chamber members have expressed their frustration and concern over rising costs and over regulation.

Higher costs for employers will inevitably lead to higher prices for consumers.  If the businesses cannot transfer these new costs to the consumer, employers will be looking to reduce overhead by cutting staff hours and possibly cutting the number of staff.  This will reduce the job opportunities available to youth and other low-skilled individuals who need employment.

Hot Potato, Hot Potato And The Minimum Wage Debate

While we understand the commendable intentions of these proposals, it is clear that the government can’t legislate prosperity.  Instead of creating more opportunity for workers, changes like these often have the opposite effect by reducing jobs and increasing the cost of living.”

Arguments in favour of the minimum wage hike:

In a recent interview, venture capitalist and critic of income inequality, Nick Hanauer did not mince words:

“The fundamental law of capitalism is that when workers have more money, businesses have more customers and need more workers… [There’s been] essentially 100 years of wealthy owners telling workers that if wages go up, employment will go down, but in fact it never happens.

The only thing that’s really true about the claim that when wages go up, employment goes down, is that if people like me can get people like your listeners to believe it’s true, it will work out really, really well for people like me. The truth is that this claim really isn’t a description of reality. It’s more of a scam or an intimidation tactic. It’s essentially a threat that powerful people use against not powerful people to scare them away from higher wages.”

Look back historically to the moments when wages went up and take a look at what happened in the past…What you will always find is that when wages go up, particularly when wages go up for everyone all at once, what you find is robust, economic growth.

You have to understand, from the point of view of an individual business owner, paying more wages is bad. Who wouldn’t want to pay their workers poverty wages and keep profits high? But the problem is, everybody can’t have that deal. If no one pays their workers good wages, then who will buy the stuff and who will pay the taxes? The people who are defending these low wages today, essentially are free riders. They’re parasites on the larger economy.”

We will give Don Lee the last word. In his article for the LA Times A new dawn for the minimum wage he writes;

“Community activists and politicians see a $15 minimum wage as the antidote to the ills of rising inequality, a way to reduce poverty and stimulate the overall economy. Business owners warn it will tie their hands in downturns, drive small employers out of business and lead to millions of layoffs.

The reality is not that simple: An increase to $15 an hour would ripple through the U.S. economy in some unexpected ways that are, generally, not as bad nor as beneficial as each side claims.”

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