Why I oppose the minimum wage idea

Editor, I wish to react to Sunny Ntayombya article under the headline “It is time for a FAIR minimum wage law” in The New Times of May 2. The minimum wage is a very risky proposition and should not be argued in the abstract.

Wednesday, May 02, 2012
Employees at work. The NewTimes / File.

Editor,I wish to react to Sunny Ntayombya article under the headline "It is time for a FAIR minimum wage law” in The New Times of May 2. The minimum wage is a very risky proposition and should not be argued in the abstract. My position is that a minimum wage is also likely to hurt the very people it aims to protect. There are more effective and more efficient ways to distribute and allocate assistance to those in need. It may affect the ability of lower-skilled workers to secure a job because employers will be reluctant to employ them if the minimum wage is higher than the value of what they can contribute. These workers would be denied the opportunity to work for a lower wage that reflects their skills and ability, even if they wish to.Contrary to what Sunny believes, instead of helping low wage workers, a minimum wage may lead to a lose-lose-lose situation: for our economy, the company, and most importantly, the workers whom we are trying to help.Minimum wage legislation acts as a tax on employment. Forcing an employer to pay more than the market rate for labour has the same effect on employer behaviour as a tax on every worker hired. Small businesses often work on thin margins and encounter difficulty during an economic downturn. What happens if their labour costs go up? If the minimum wage is set near the equilibrium wage for the poorest workers, there may be no effect on employment in the short term – but there may be no effect on living standards either! On the other hand, a significant increase in wages will make a big difference to the quality of life for those still employed, but the economic effects will be commensurately greater.Liban MugaboLiban.mugabo@gmail.com