Minimum wage/unemployment nexus explained.

John Humphreys has done an analysis of the impact of the 2.9% rise in the minimum wage and comes to the conclusion that it will cost in the region of 100,000 jobs. This does not infer that this number of workers will be fired; not that many will be, the biggest loss will be in the area of jobs that could be created at the old rate but will not at the higher one.

Publishing it on the far left ABCs ‘The Drum’ seems to indicate that he is not the sort of man who preaches to the converted. If a commonsense article on the subject is not enough to send you across, the derangement in the comments section should. Its nearly as good as poking a wasp’s nest with a stick:

The announcement that the legislated minimum wage will increase by 2.9 per cent means that we can expect there to be nearly 100,000 fewer jobs in Australia. In response, commentators and unions have cheered and asked for more.

This is a great example of Bastiat's old rule about what is seen and what is not seen. When a business downsizes and people lose their jobs, the impact is immediate and visible – resulting in news headlines and stern-sounding politicians. But when the government subtly destroys thousands of jobs slowly and indirectly, they are given a free pass.

Of course, that is cold comfort for the unemployed. Not only does the government get a free pass on this disastrous policy, but the opposition jumps on board too, and the chatterati clap along.

Even business groups play the game by accepting an increase, though they wanted it to be smaller. If the Australian Chamber of Commerce and Industry (ACCI) had got their way, then the government would only destroy 50,000 jobs. The Australian Council of Trade Unions (ACTU) on the other hand wanted to destroy 150,000 jobs. …

The scary truth that some politicians know but all avoid is that the minimum wage is bad policy. If it cannot be removed, then it should at least be frozen for several years so that it becomes functionally irrelevant.

If the government and their union cheerleaders actually want to help workers, then the best way forward is to increase our national productivity. The government needs to revisit the Henry recommendations for corporate tax cuts and they need to find ways to lighten the regulatory burden, especially on small business.

But you don't start a productivity drive by throwing 100,000 people out of work.

The full article is here.

Editorial note: John is the founder of the Human Capital Project; a non-profit designed to assist Cambodian students to obtain a university education. As many of those commenting on the article seem to indicate that only wealthy people would approve of the content perhaps you all could have a look here and donate to it as a way of reducing the heavy weight of all of that massive amount of cash in those deep pockets of yours.