Wednesday, April 8, 2009

Stay clear of the dead-end that is a minimum wage

Nicole Idanna Alpert - The Lion Rock Institute Research Associate ( The Standard , 2009.4.8)

The recent developments in the Hong Kong minimum wage boggle the mind and the only solace is in the comical side- stories of this perverse policy tragedy.

Why would a minimum wage policy, whose raison d'etre is to save our city's most vulnerable, still exclude those who are the least fortunate?

It sounds like a riddle, but the answer is that a minimum wage policy doesn't actually work. It does the exact opposite of what its promoters claim it intends, which begs another riddle: if it doesn't work, why is it being promoted in Hong Kong?

It all boils down to politicians crafting policy to satisfy their political needs and not being able to offer our society anything better.

It is old news that a minimum wage does the exact opposite of what it intends. A minimum wage and its effect on jobs can be understood much like the supply and demand of any product. When the price increases, people, including business owners, buy less of it. Jobs are lost and therefore competition for them rises.

The least skilled and least educated - the most vulnerable in our society lose out. Instead of a minimum wage helping the vulnerable, it renders them jobless and destitute. In effect, it asks the least fortunate to subsidize those better off.

Why then, do people push a minimum wage?

Those who support the policy span from wishful thinkers who don't understand economics to the cynical. These include unionists and politicians who have vested interests. When you hear the rhetoric that a minimum wage will help, you have to ask: " Help who?"

At first, the public is told to expect it will help the most vulnerable. But talk of exemptions exposes the lie.

To wit - why make exemptions if this policy really helps the least fortunate? The suggested exemptions for live- in workers show that representatives know jobs will be lost under a minimum wage. The only delusion is how many.

Advocates of a minimum wage are willing to sacrifice a few for the benefit of many.
The morality of choosing to sacrifice the unlucky aside, it will in fact be far more than expected, as the permanent underclass of Western countries reveals.

The recent discussions show a minimum wage as the perverse policy that it is and proves that it doesn't help the most vulnerable.

Herein lies the tragedy of this comedy of errors.

While it's very clear that everyone agrees a minimum wage kills jobs, the policy is pursued anyway.

Those who still push for it must be deluded or cynical.

Even the minimum wage board believes it would create unemployment for the low-skilled, new graduates and domestic helpers. It has been clearly illustrated to the public - in the form of exemptions and overseas experience - that a minimum wage does not work.

Once a policy is put into motion, it can hardly be turned back.

The public needs to examine the evidence and protect themselves now. They must step forward and voice their opinion so this perverse policy will not be made into law.

Only then will we be able to focus on new policies that can actually help the least fortunate in our society.

Though supporters of a minimum wage wouldn't tell you, there are many realistic ways to help our city's most vulnerable including minimum income supplements.

Once the public recognizes the problems behind the policy, they should force policymakers to go down another road - preferably one that doesn't lead to the dead-end that is minimum wage.

No comments: