Minimum wage boost urged

As many people know, the minimum wage is $8/hour and the training wage is $6/hour. About 80% of the people (601 BC residents) surveyed in a Strategic Communications poll supported a $2 increase in the minimum wage. 73.5% thought that the training wage should be eliminated. In BC, 6% of workers make minimum wage.

The article says that N. Vancouver Mayor Darrell Mussato believes that full-time workers should earn enough so they are above the poverty line. However, an economist at the Frasier Institute argues that any increase would be a negative. Research shows that when the minimum wage is increased, the drop-out rate in schools go up as well. Veldhuis says that increases in minimum wage discourage students from pursuing better career paths. He goes on to suggest that a broad tax reform would be a better solution in any case.

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Relationship to Ch. 3 -- The Role of Government in a Market Economy

Distribution of income: Income differentials are reduced by having minimum wage since not as many Canadians are in the state of poverty. Mayor Darrell Mussatto said that full-time workers should make enough to live above the poverty line, which is what minimum wage generally does. I find that training wages are more directed to teens, who are already living with parents or relatives. Under those cases, the teenagers are employed to earn money for frivolous items such as games, as well as cash for social outings. However, they are not living in poverty since they do have a home and most likely are supplied with food, shelter and clothing as a basis. The abolition of training wages could have a chain of effects that would not serve the economy, as well as the citizens, for the better.

Minimum wages act as a price floor, which is a government-imposed minimum price. An increase in minimum wage could have quite a few third party effects. If it goes up, the cost of goods must go up in order for the seller to make a profit is one scenario that involves the consumers. Another would be that the owner of the company would have to discharge their workers in order to keep operations running. If what Niels Veldhuis says is true on higher drop out rates, this would have a negative impact on the economy. The more money there is to be distributed, the more there is spent, which is good for companies who hire more workers and the cycle repeats.