If I can pay $8.00 an hour and I need three workers, the most I can pay $24. With a living wage of say $12, I can only hire two workers. One job is lost. Two people may be earning more, but one is now jobless, and my firm gets less work done. A living wage is essentially a subsidy, because it guarantees a certain amount will paid. Subsidies cause a surplus of labor. So workers will be paid more, but less jobs will exist. The only way to support these out of job workers is with welfare, since all the jobs will be taken. Welfare costs money, the taxpayer will have to pick up the costs of firms being less productive. since no one will be living below the poverty level, the increase in wage will most likely be offset by the higher taxes. The higher the living wage, the higher the taxes and the higher the unemployment rate.
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"Only two things are certain: the universe and human stupidity; and I'm not certain about the universe."
-- Albert Einstein
Last edited by madsenj37; 12-03-2004 at 02:15 AM..
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