Jason Urbach argues that it is morally wrong to impose a national minimum wage because it will inevitably make some citizens unemployable.  So although the intention may seem good it will ‘harm the very people it pretends to assist and exacerbate poverty and inequality in this country’.

Proponents of a national minimum wage talk almost exclusively about the benefits that will accrue to those who have jobs.  They rarely, if ever, talk about the costs.  Some special interest groups even go so far as to say that there is “no mechanical link between wages and employment levels” in a disingenuous attempt to hoodwink the public.  This is a ploy that can be easily dismissed with a simple thought experiment: if there really is no link between wages and employment, why not set the national minimum wage at R100,000 a month, or even R1m a month?

Read in full: Minimum wage will only worsen joblessness, an article written by Jason Urbach, a director of the Free Market Foundation, first published today by Business Day on BDlive .

Further excerpts

Unseen, and too often ignored, are the people — especially the unskilled and inexperienced — who might have had jobs if they were not being priced out of the labour market.

The results of the quarterly labour force survey, published by Statistics SA, noted some alarming labour market trends.

The unemployment rate increased from 25% (5.23-million) in the second quarter to 25.5% (5.418-million) in the third quarter, a loss of 188,000 jobs in three months, according to the strict definition. A more realistic representation of what is happening is the expanded definition of unemployment that includes so-called discouraged work-seekers and puts the unemployment rate at 34.4% (8.304-million people). A very bleak picture indeed.

Of the unemployed, 63.9% have been out of a job for longer than a year and a staggering 62.1% are between the ages of 15 and 24 years. If the low end of the labour market were allowed to function unhindered, young, unskilled people would not have such a desperate struggle to get on to the first rung of the employment ladder.