Q. Do you believe in abolishing the minimum wage? And what happens when the minimum wage is abolished? (I know, that’s a really vague question. I’m just skeptical as to how much it would actually benefit the employee, as opposed to the employer). – Aaron, from the internet.
A. The short answer is yes. The slightly less short answer is yes, because it’s bad for employees at least as much as it’s bad for employers—and in particular it’s bad for the least skilled, most disadvantaged, and, basically, poorest potential employees. Teenagers and those with little education are hit the hardest. You’re no doubt aware of the idea that minimum wages result in fewer job opportunities for low wage workers. To give a crude example, if an employer can afford to pay someone $6/hour and the minimum wage is $8/hour, he may simply get rid of the position, which means that anyone who would have taken the job at $6/hour may well remain unemployed.
Other hidden costs of the minimum wage include less job training, skilled workers being hired for unskilled jobs while unskilled workers are pushed out of the job market altogether, and even the creation of black markets for sub-minimum wage workers where employees do not feel they can go to the justice system for help if they are in abusive or even criminal situations. It has even been argued that the minimum wage and similar workplace regulations allow racist and otherwise discriminatory employers to practice their intolerance without the social and financial penalties which would otherwise kick in.