The Folly of Minimum Wage Laws 

It used to be the case that most economists argued against minimum wage laws primarily because it seemed obvious that unemployment would result. 

The history of minimum wage laws is long, reaching back at least to the Stuart and Tudor era in England. Then as now such laws are indefensible. 

The Tim Horton’s coffee shop chain is in the news because in response to the latest round of laws setting minimum wage some of the franchise operations in Ontario have been cutting other benefits. According to The Globe and Mail boycotts by customers have begun.

Wages are an expense paid in advance with the expectation that revenue will be enough to cover these and other expenses to yield a profit. That is the source of the capital whether drawn from such earnings or financed by debt. 

Minimum wage laws add significant cost to enterprise particularly those with low rates of profit such as restaurants.

The only options are to cut costs or raise prices or most likely both. It’s a simple thing to understand and yet politicians continue this stupidity over the centuries. 

Finally there is the moral breach. By what right does any government interfere with private enterprise so intrusively, particularly given the record of failure of these laws?

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