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Is raising minimum wages the answer?

I was reading an article from The Economist in favour of raising minimum wages in the U.S. that compares how other countries do it versus the U.S.:

Britain’s experience offers another set of insights.

The country’s national minimum wage was introduced at 46% of the median wage, slightly higher than America’s. […] Before the law took effect, worries about potential damage to employment were widespread. Yet today the consensus is that Britain’s minimum wage has done little or no harm.

The most striking impact of Britain’s minimum wage has been on the spread of wages.

Not only has it pushed up pay for the bottom 5% of workers, but it also seems to have boosted earnings further up the income scale—and thus reduced wage inequality.

Wage gaps in the bottom half of Britain’s pay scale have shrunk sharply since the late 1990s.


Wage inequality fell more for women (a higher proportion of whom are on the minimum wage) than for men and the effect was most pronounced in low-wage parts of Britain.

…and it made me think of something else:

Perhaps if minimum wages were higher in North America, people wouldn’t feel the need to try and go into student debt to the tune of $25,000 to get a college degree that is for 75% of people, essentially useless.

Read: A college degree doesn’t necessarily mean you have any skills.

Currently there is far too much supply (too many eager college grads) for the little demand that exists for really good jobs.


If minimum wage was higher, maybe it’d help the economy in general by not forcing heavy debts on those who cannot afford or use it, and to provide a living wage by doing the jobs that are already readily available and meant for most of the population.

(That and perhaps also implementing universal healthcare, as you already know how I feel about healthcare not being universal in the U.S.)

The downside to all of this, of course, is that people fear those minimum wage jobs will move overseas.

Oh wait!

Maybe not as much as you think.

You still need people on-shore to serve burgers and stock shelves, it can’t be done by a cheaper-than-an-apple-by-the-hour group of foreigners working offshore in another country.

Which by the way, doesn’t always end up being a good deal, and anything too-cheap can harm us as consumers in the end:

Read: Pay for what something is really worth and Toxic Threads: Is your cheap sweater killing you?)

At any rate, I am all in favour of raising the minimum wage as it falls in line with the economy.

Otherwise, the gap between the rich and the poor grows wider and wider, and society has other negative effects to deal with as a result.


  • ahp987

    This is not necessarily the right answer. If we raise the minimum wage, we will indirectly pay for it. I bet the cost of goods will easily go up a little to compensate for it.

  • saverspender @ save. spend. splurge.

    I guess they made the trade off between more people and more money which in my mind is not fair but it does cut down on having too many employees sitting around doing nothing.

  • Anne @ Unique Gifter

    Raising minimum wages is very complicated. Most of the time, it does not in fact better the situation of the poorest folks in our society, it primarily goes into the pockets of middle class teenagers, university students and those freshly out of high school/post secondary.
    One short version of this is that raising minimum wage generally erodes the purchasing power of …minimum wage earners, so they are no better off at the same time as you and I are no better off (depending on our inflationary raises).
    Your point about an oversupply of college/university graduates, however, is spot on and has a huge impact on minimum wage earners.

    • saverspender @ save. spend. splurge.

      Nothing is simple in our economy any more. If it were, everything would be hunky dory.

      I do feel very strongly about too many people getting a degree that will do nothing for them in their future. They should really just accept a reality that they MAY NOT be all doctors at the end of the day, and find a job they can realistically do.

  • Tim

    Mmm, perhaps the alterative is scrap the minimum wage and introduce a minimum citzen’s annual income. Stop screwing around with complex programs to support the poor and just give everyone a floor which you can’t fall under. I don’t know what value to set it at…perhaps $10,000/person over 18. How much would we save by getting rid of every support program in the country? Would it even cost us more or just end up saving money overall?

  • cj

    Mochimac!!! I saw fellow students graduate from the music program in which I partook that, after 4 or 5 years of “education”, still had no sight-reading skills, knew next to nothing about music theory and history, and still could hardly play their instrument. So absolutely ” A college degree doesn’t necessarily mean you have any skills.”

    And hell’s yeah, the min wage ought to be raised over here. No-brainer. If we want better employees and service, then we must pay for it. Right now, we are paying for exactly what we are getting: CRAP. Great article, Mochimac!!!

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