In­creas­ing wage not the an­swer

The Guardian (Charlottetown) - - EDITORIAL -

It is a pop­u­lar ar­gu­ment that in­creases in the min­i­mum wage is ben­e­fi­cial for the econ­omy. This may not be en­tirely true. Yes, gov­ern­ments and unions do ad­vo­cate for in­creases in min­i­mum wage, in or­der to im­prove the stan­dard of liv­ing and in­crease spend­ing among work­ers.

But, what neg­a­tive ef­fect does it have, for in­stance, on the peo­ple of Charlottetown whose min­i­mum wage has in­creased to $11.25 per hour?

Ba­sic eco­nomic prin­ci­ples sug­gest that in­creas­ing min­i­mum wage will re­sult in job losses. This is true for small busi­nesses, es­pe­cially in a town like Charlottetown that is flooded with small busi­nesses that rely on min­i­mum wage work­ers. An in­creased min­i­mum wage raises op­er­a­tional costs and low­ers profit mar­gins for business own­ers.

An es­ti­mated 19 per cent of the pop­u­la­tion of Charlottetown is aged 65 and over. An in­crease in min­i­mum wage means, older and more ex­pe­ri­enced work­ers now have an in­cen­tive to con­tinue work­ing. This re­duces the de­mand for un­skilled la­bor such as teenagers and young adults.

In­creases in the min­i­mum wage in Charlottetown and glob­ally will not nec­es­sar­ily re­duce poverty. While some work­ers are lifted out of poverty, oth­ers may fall into it. This may be­cause firms sub­sti­tute work­ers for cap­i­tal ma­chin­ery, cut back on worker hours or cut jobs com­pletely.

In as much as we want to in­crease min­i­mum wage, we should re­al­ize that it could do more harm than good to our econ­omy and us. God­fridah Simuzingili, UPEI Stu­dent

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