Tuesday, May 4, 2010

Minimum wage System will lead to increase of illegal immigrants?

Some time back, I read an article that states that a minimum wage system will lead to an increase of illegal immigrants. Frankly, illegal immigrants will want to come in whether there is a minimum wage or not. Based on a per capita basis, we already have an un-declared minimum wage and that's why there will always be people trying to sneak their way in. The wages they earn here is already much more than back in their home countries. In short, illegal immigrants will come regardless if there is a minimum wage system. Note the word illegal. Enough said.

In my opinion, a minimum wage system is discouraged because it
  1. is difficult to enforce;
  2. is difficult to set the minimum wage; and
  3. alienates inexperience/unskilled workers.

Just imagine the amount of manpower needed to enforce the number of employees that a company has. How about contract workers? Shift workers? Enforcement will be an inconvenience to any business and a manpower nightmare.

Who will be able to convince everyone that the minimum wage is $x and not $y? Where do you get the number from? Will your wage be a leading or lagging indicator? Will we end up like Greece? Just plucking the number out will be a challenge by itself. Will the bosses think that the minimum wage is fair for the amount of work that needs to be done?

Alienating inexperienced/unskilled workers is one area that I felt will be a logical outcome. Relating to the previous point, setting a minimum wage says nothing about the job scope. Who is it to determine that the minimum wage fits all kind of job scopes? It's nearly impossible to determine that.$x equates to this amount of work done. End up, all the bosses will have their own idea of the amount of work needed for it to make sense to hire anyone, thereby alienating the more inexperienced/unskilled workers. This will lead to many other negative side effects as these workers will not be able to find any work at all.

It's easy to say to setup a minimum wage system but to set up a sustainable system for generations to come, I believe that we're still some way off from there.

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