What if there were no minimum wage?

Question

My take on it is that having a minimum wage sets a defacto price for low end labor thus removing the natural self regulating price that a true free market provides. It would be impossble for all of the burger joints and car washes in the country to colude to set the price for labor. If the minimum wage were to be abolished all together, this would actually cause wages to rise because each employer would then have to set the price based on market forces. If the government tells all employers how much to charge for labor then they will simply all charge that rate and not have to pay competative wages.

Answer 1

If there were no minimum wage, you would see fewer people standing in the middle of a road holding a sign begging. We would have lower unemployment. We would pay less tax because fewer people would be on welfare.

The downside...
Some politicians can no longer use the minimum wage issue to gain popular votes. We would no longer need people to enforce businesses to comply with the minimum wage laws.

Answer 2

No, you're off base. It's true that the minimum wage does no good and does harm instead, but not for that reason.

There are many places right now where the prevailing natural market clearing price is HIGHER than the minimum wage -- and in those places the legal minimum wage is meaningless. You go to a McD's to apply for a job, and the pay is $7 or $8 an hour. Employers can't pay less when the shortage of labor forces them to pay more. (This is a fact that minimum wage supporters and people who bloviate about exploitation never understand.)

Where the natural minimum wage is lower than the legal one, the result is less employment as the most unproductive people cannot get jobs.

So your conclusion is wrong, but it's fair to say the legal minimum wage is either meaningless or else harmful, depending on where you live.

Answer 3

Your argument falls on the point that minimum wages would rise because they would have to set the price due to market forces.

If that is true then wages should go up with or without a wage floor. Setting a floor in no way stops company A from competing with company B for employees. If the minumum is 5/hr and you're not getting enough workers at that wage, then you increase it to 5.50, then 6.00, then 6.50 etc, til you get the employees you require.

As others stated that is already happening in some regions.
The problem occurs when you are offering 5/hr and you have hundreds applying for 10 jobs. It's a signal you're paying "too much" and could do better by lowering your wage and expanding... but the damn government who is too concerned with 'poverty' won't let you do so.

Mind you, if the second part is the case and you have no minimum wages, businesses have been known to take advantage of the situation. Remember the song 'I owe my soul to the company store?' I can't imagine a WalMart or other big retailer ever returning to days like that! Heavens no.

Peace

Answer 4

In developed country like the USA, UK a rise in the minimum wage just increases the prices of goods for people across the broad and small business have to lay off people to pay the differenece. Other industries would lay off lowest skilled workers, and try to find workers that are more educated to pay that minimum wage. Market forces will determine the apporiate wage if the wage is too low the employer will have a hard time finding workers to work. In other counrties the goverment intervenve to make sure the wage is below the market wage to force savings, and investment in instructure by lowering the wage than it otherwise would be based on market results. The goverment should stay out of the wage business all together, and provide the basic tools to work, like healthcare, education, public safety.

Answer 5

I doubt very much if minimum salaries would be any higher than today's minimum wage. Most who work at minimum wages are students or seniors. Those two groups have a short job term, meaning several years tops. The other group, the uneducated, then to stay at minimum wage jobs longer, thus get pay raises based on how long they have been there. So for them to stay at a high minimum wage is definitely a plus. So if they stay at the same job for 20 years, they could earn a decent salary. That' why you see sometimes those in the 50s working in supermarkets. They have been at the same job for 25 years and earn about $45,000 a year in NYC metro area. Not that good, but good enough to rent an apartment.

Answer 6

Actually, no minimum wage would mean that you would basically be paid nothing, considering the work you do, because no employer would want to pay the employees, more than they want to. China and India are two famous [or rather infamous], examples of this concept.
Your argument of the employers competing for employees, and in result raising the wages, cannot be 'right', because [as we've seen with illegals], people need work, and when the employers don't offer good pay, but you need to support yourself, and feed yourself, then even those dirty coins start looking polished.

Answer 7

I tend to agree. When California upped the minimum wage by a dollar, that meant the the manufacturing and retail markets need to charge more to offset that amount. Effectively, they just reduced my income by a dollar to pay for all this. THANKS!

If there were no minimum wage (or if the wage were low) those with less income would still be able to purchase because prices would be lower.

Answer 8

Yes, you are correct, but try explaining that to an anti-liberty government-lover. They, of course, will bring up nations that do not have nearly the freedom or transparency as ours.

Government sets a price cap on goods, people charge the price cap.
Government sets a price minimum on labor, people pay the minimum.
.

Answer 9

You make a point, but then there would also be those employers who would pay next to nothing...but then they'd just have a tougher time finding employees.

Do other countries have a minimum wage or just the U.S? Might be interesting to see what works elsewhere.

Answer 10

Your point has many holes in it. If there was no minimum wage, and wages were high everywhere, the price of goods and services would skyrocket. The best thing is to find a happy median where all sides can benefit.