Tuesday, April 22, 2014

A $25 Minimum Wage?

The Swiss people will vote next month on a measure to increase the minimum wage in Switzerland to 22 francs/hour (~$25 US).  Of course the trade unions are chief lobbyists for the higher minimum wage.  These legal statutes backed by threat of violence ensures that cheaper labor is literally unemployable leaving current job holders with less competition.

As the overall pool of employable labor decreases total human production also falls.  This leaves everyone with fewer choices of goods and services (essentially creating more poor people).  Taken to the extreme if the minimum wage was 100 francs per hour would total production of goods in Switzerland increase or decrease?  

In response to the proposal George Sheldon, professor of economics at the University of Basel said:
“Unemployment among the unskilled is increasing,”...“The solution to their problem can’t be to make them more expensive.” 
Sheldon is inquiring about the plight of the currently unemployed.  These folks are simply ignored by the supporters of minimum wage statutes.

More of the story at Bloomberg.

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