Letters to the Editor

Reduction in minimum wage may be better

Wednesday, June 20, 2012    

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Dear Editor,

I note that new discussions have begun to possibly increasing the minimum wage. While at first glance this appears to be well intended, the public should be made aware of what research will be undertaken.

It must be abundantly clear that with each increase in the cost of labour it becomes more difficult for employers to continue to hire. With that in mind, the focus should be around the number of people affected (employers and employees); the resulting increase/decrease in unemployment and the perceived benefit of an increase in the rate.

If there is any truth to the belief that “money marries money”, then the reverse would be true that “poverty marries poverty”. Well, at least in a number of instances. Consider a family where both people were taking home minimum wage last year of $8,170 per week ($4,070 X 2): with the increase in minimum wage it could mean that the family would take home $4,500 per week this year, if one member of the family was unfortunately laid off because the employer could no longer afford to pay the minimum wage.

Another measure to consider is the increase of beneficiaries on the PATH programme subsequent to an increase. An increase could indicate that the net effect of the minimum wage increase resulted in more people being added than being removed, because they had become richer due to increased salaries. Naturally, the obverse would also pertain. The government should be reminded that they have chosen an austerity budget, which brings new taxes and increased revenues and an almost invisible reduction in GCT for individuals.

They have also chosen to hold steady the wages of civil servants as they pursue the path to nation building. Along that line, a reduction in minimum wage may be a more feasible measure. It would mean that more people could potentially be employed with a rippling spending effect that can attempt to boost the economy greater than the JEEP, whose cost must also increase with the minimum wage. The logic is simple: instead of employers saving money because they can no longer afford to pay the minimum wage, they would spend it. That is extra spending in the economy that continues to ricochet to the country’s benefit. The government must consider these things and give the country an idea of how they arrive at their decision. It cannot simply be the pulling of magical figures from a hat. No; the curtain must be drawn for us to partake in the show.

Robert Howell






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