Originally Posted by DSNY FN
We have this up here to be considered for Welfare you need to be able to work X number of hours a week they call it workfare up here and it is really helping to get people out of the system. That and the fact that we are rasing our minimum wage from 8.50 and hour to 10.50 an hour. People up here screamed about workfare but hnestly it is a boon to business the governemt pays part of the wage and the company pays part of teh wage to start off with then after a period of time and when the recipient is in a more stable situation the gov funding portion ends.
I believe raising minimum wage is a bad deal, and that they should leave the market to work out what the equilibrium wage should be for any given job. I wish I could put a powerpoint slide up as I can show you graphically why I believe its a bad idea.Socially, higher minimum wage has also been traced and confirmed to cause increases levels of high school and college drop outs. While that's not a lot of money to most people, some college and high school students think it is and it is an incentive to not finish their education.
What's worse is that minimum wage mandates can over the long term cause unemployment. What it will do is make investing capitel in tehcnology much more attractive over using labor as an input. What raising the minimum wage above the equilibrium point does, is that at the higher wage, more people will now be interested in looking for a job. However, this is going to force firms to reduce demand for labor and substitute other inputs such as technological investments. So demand for a job by workers will increase at this new wage, but the supply of labor will go down causing unemployment.
Then other issues arise if technology isn't readily available. In that case, the firms may just pass on the added costs to consumers by charging more for their products. In the long term, this decreases the competitivness of a firm in the global market. One thing for sure that westernized countries are going to need to get away from, is relying on manufacturing for their economy. It is clear that western countries no longer have a comparative advantage in that sector compared to these new emerging economies like China, India, and even some of these 3rd/4th world countries. Unions need to stop bitching over the loss of manufacturing now, and start coming up with a solution. Unless western countries find other markets where they can hold a comparative advantage over other countries, they will cease to be an economic power.