Increasing wage not the answer

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