July 10, 2009
– Comments (1)
I don't buy the argument that minimum wage is mainly responsible for the elimination of jobs. Automation, corporate cost-cutting, and job outsourcing are the major reasons.
ATMs have replaced bank tellers; voice mail has replaced phone receptionists; self-checkout machines are replacing cashiers. Machines can do these jobs for pennies per hour, so there's no way humans can compete, even at a measly wage of $4/hour.
Why hire a worker at all when customers can bag their own groceries, pump their own gas, or find their own theatre seat for free? Similarly, why pay an American employee $4/hr when a worker in China can do the job for $1/hr? I don't agree with it, but that's how corporations cut costs in an effort to increase profits. Yes, many low-skilled jobs have been lost, but they would have disappeared even without minimum wage laws.
I'm also not convinced by Peter's fence-building example: he claims that paying 3 unskilled fence builders $4/hr each (total $12/hr) is better than paying 1 skilled fence builder $15/hr. In reality what usually happens is the unskilled workers take twice as long to do the job and/or they do such a bad job that you end up hiring the skilled worker to tear down the crappy fence and build a good one from scratch.