The End of Free Market: Minimum Wage?


Recent analysis of changes to Hong Kong are getting press in the Economist.   A new law is going to be passed setting a wage floor in Hong Kong.  For years, the city has managed to grow, thrive even, without the common law known as Minimum Wage.

The legislation is set to impose a minimum wage between $3.00 and $4.00 American.  Not much by our standards, but then again, perhaps our standards are a bit exaggerated.

The typical wage for an American food preparer, or fast food worker, in 2009:

Median hourly wages of combined food preparation and serving workers, including fast food, were $7.90.

Currently in Hong Kong, that wage is about $2.  If the minimum wage being proposed in Hong Kong were to be implemented here and normalized, your McDonald’s worker would go from making $7.90 an hour to $10.53, or an increase of 33%.

For those who think this is good news, that raising the pay of low-end workers to something that “they can live on”, I suggest that they ask the worker who will lose his job as a result of this new law:

Miriam Lau, a Liberal member of the legislature, says that even at HK$24 an hour, the minimum wage would cost 30,000 jobs, or 1% of the workforce. At HK$32, 170,000 jobs would go, doubling unemployment.

And the very people who this law is supposed to protect?

Young people and immigrants from China, who are scooped by the territory’s abundant restaurants, building sites and cleaning and delivery businesses, would be the likeliest to be out of work. Such industries also employ disabled and older workers on low pay. Subsidies to support such people may have to be expanded if they lose their jobs.

Yup.  The young, immigrants, the disabled and the elderly.  Virtually every demographic that this law intends to help will be negatively impacted.

Given the very predictable damaging consequences of this legislation, is it possible for someone other than a populist Leftist politician trying to get elected to support this law?  Yes:

The pay floor will be low, probably between HK$23 ($3) and HK$33 an hour; the higher figure is trade unionists’ target (see picture).

That’s right; your friendly neighborhood trade union!  The reason they want minimum wage laws?  Because it raises the wages for their members.

And why do Unions want higher wages for their members?  Because when wages are higher, the mandatory Union dues go up.

Leftists in bed with Union members = Nothing good for the people.

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