Minimum Wage – A Policy that Sacrifice the Low-Skill Workers


minimum wage

Hi guys, I am Mike, the new member of the editorial team of Libertarian Scot . From now, I will work along with Scotty M to provide a libertarian perspectives on different issues around the world. Let’s begin with one of the most debatable issue in the labour market , the minimum wage law.

For a very long time, people advocate the minimum wage law emotionally believe by setting the floor of the wages, this can provide a decent living for the workers. However, a good intention is not necessary means it is effective to help those who need, and it can create a reverse effect.

There are many people wrongly assuming the interest of employers and employees are conflicting to each other, hence the so-call ‘brutal bosses’ are to be blamed for the  low salary for the workers. However, in economics explanation, motive itself is not sufficient enough to determinate how the situation developed, but the constraint of the real world that decides what happens.

Under this situation, the degree of the intensity of competition in the labour market is the most relevant constraint, since competition forces buyers to raise their price and the seller reduce their price. When we discuss competition, it is always the competition among buyers themselves, or the competition among sellers themselves. The buyers have the conflict of interest among themselves is because once a buyer can buy a good or service, other buyers are not long able to buy that good or service, and the similar situation occurs among the sellers.

If a seller successfully sell a good or service, that is because the buyer of the good or service believes the price reflect the value of the good and service, and other sellers might not be possible to sell their goods or services under the same price unless they can offer the value of skills.

I suspect the knowledge of competition among most of the British are over-influenced by the financial and real estate market, since these market are operating under the redistribution of wealth. Within these markets, buyers and sellers are not cooperating with each other to create wealth, it is the individual to use his/ her intelligence to try to transfer the wealth from the counterpart to him/herself. As a result, when there is a transaction within these markets, there will be winner and loser. In other words, when someone is earning money within these markets, which means someone is losing money within these markets at the same time.

The reason for the employer can decrease the price is because there are workers that are willing to accept the price, and in order for these workers to work, they have no choice since their skills are not enough to get for a higher price.

The only way for this type of marginal, low-skill workers to secure a job is to reduce their requirement in salary. If under the minimum wage law, these marginal or low-skill workers can continually being hired, their quality of life will be enhanced, but the big question is ‘If”.

The minimum wage laws will make these type of marginal, low-skilled workers no longer able to use their only weapon, drop the price, to compete with other workers that have higher skills than them, which means these people will no longer able to find a job.

While politicians are campaigning for the minimum wage and said it is immoral for people to get pay for less than a certain among of money per hour, is that immoral for low-skill workers to lose their job because of this law? Indeed, it is immoral for these low-skill workers to lose their opportunities to work because of the minimum wage law.

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