Opinion: SJ minimum wage increase doesn't help citizens in poverty

The Frasier Institute’s Niels Veldhuis and Sylvia LeRoy explain that, historically, mandating an increased minimum wage—as SJ advocates are suggesting, citing housing unaffordability—doesn’t benefit poor people. Instead, minimum wage spikes force local businesses to cut employees (or hours, benefits, etc.), thereby making the job hunt more challenging.

With the best of intentions, minimum wage advocates argue that increases are needed to reduce poverty for the working poor and that it can be done without negatively affecting employment. The unpleasant reality however, is that increases in minimum wages are accompanied by a host of negative side-effects and, more often than not, end up hurting those they are intended to help.

The single largest problem with increases to the minimum wage is that they result in higher unemployment for low-skilled workers and young people. Put simply, increases in the minimum wage increase labour costs to employers who respond by reducing the number of employees and/or the number of hours worked.

A recent study by two of the world's most renowned minimum-wage experts, University of California Prof. David Neumark and U.S. Federal Reserve Board economist Dr. William Wascher, comprehensively reviewed all of the academic studies of minimum wages over the past 15 years. They reviewed more than 90 studies covering 15 countries and found that the overwhelming majority of studies consistently show that minimum wage increases have negative employment effects.

This article originally appeared in the Frasier Institute. Read the whole thing here.

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