I am against the minimum wage because:

• it involves force
• it probably increases unemployment

Where’s the force?

If you pay your employees below the minimum you will be fined.  If you fail to pay the fine they will send the bailiffs round.  If you obstruct the bailiffs they’ll send the police.  If you obstruct the police they will use violence against you.

Why do you say “probably”?

Although most of the evidence suggests that minimum wages cause unemployment (see here), there is some out there (I know because I read it, but please don’t ask me where) that suggests that it reduces profits.  This is also a bad thing.

How would minimum wages cause unemployment?

By the action of supply and demand.  The price goes up so fewer people want the product.  In this case the product is a person’s labour.

Why is lower profits a bad thing?

It means that the market - care homes are a typical example of a low-wage industry - is less lucrative which means that there is less incentive for investment which means that there is less of it than there otherwise might be.

Permalink • Economics • Last Updated: 15 January 2007

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