Minimum wage is something that always intrigued me – its effect completely goes against its intent and yet it’s still in place.  When I came across Taha Bhopalwala‘s article about minimum wage, I was thrilled!

Taha talks about the increasingly common act of labor unions abusing their power to target specific single firms, forcing them to pay their employees more.  I personally think that an unreasonably high minimum wage always does more harm than good.  Instead of accepting the loss of profit caused by the increasing minimum wage for their employees, companies are now replacing human labor with machines where possible.  I think that this the the only way that companies can remain their competitive edge in the long-run.

The push from labor unions to drive up the minimum wage is only pressuring companies to replace employees with capital at a higher pace.  If minimum wage was $8/hr, a bank might hire 10 tellers.  If minimum wage was $15/hr, the bank is being forced to purchase more ATM’s in order to remain profitable in the long-run.

I believe that it is inevitable that many employees doing low-skilled jobs are going to be replaced with advancing technology.  How would the global economy remain stable and keep unemployment rates low in order to adapt the the new way of business?  This is a question currently without a perfect answer.  I think it would be wise to keep the minimum wages down in order to buy us time to come up with an ideal solution.