Minimum Wage and Workers’ Rights

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Ask Dr. Mary Ruwart: Does Australia disprove arguments against the minimum wage?

in Liberator Online Archives by Mary Ruwart Comments are off

Dr. Mary Ruwart is a leading expert in libertarian communication. In this column she offers short answers to real questions about libertarianism. To submit questions to Dr. Ruwart, see end of column.

Does Australia disprove arguments against the minimum wage?

QUESTION: A recent graphic going around Facebook asserts that Australia’s employment situation disproves the notion that a high minimum wage leads to higher unemployment. The graphic says the Australian minimum wage is the equivalent of $16.43 and their unemployment rate is 5.3%. Does this refute arguments about the minimum wage?

MY SHORT ANSWER: The real question is “Without the minimum wage, would employment be higher than it is now?” Almost all of the research suggests that the answer would be a resounding “yes.”

However, another aspect of raising the minimum wage is the destruction of jobs of our most disadvantaged workers (minorities, undereducated, etc.). As minimum wage rises, flipping hamburgers (for example) becomes more attractive to college students, teens saving for college, etc. Minorities without a high school diploma become less necessary to employers; as a result, the disadvantaged often end up with no job at all because they have few other options. Their primary bargaining chip is their willingness to take a little less pay than their advantaged counterparts. Read more