I don't normally create threads like this, mainly because I don't believe certain things need to be proven any further, but since economic misconceptions are so widespread I figured it would be helpful. First let me say I'm not trying to prove that minimum wage laws create unemployment, because like I said I don't feel it's needed. It's truth is proven by logical deduction based on a priori axioms of human action. What I present here are simply examples of this truth in the real world. What I did was take the top 10 economically freest nations in the world and made a simple comparison of their respective unemployment rates to see if there were any correlations between the 2. I had no clue what the results would be, but it turns out the result is a perfect correlation between the existence of minimum wage laws and a higher unemployment rate. Here's my results. Here are the top 10 freest nations, in order of most free to least free. I'll list each nation, then the unemployment rate, then either a yes or no depending on whether the nation has a minimum wage law or not. 1. Hong Kong - 3.5% - Yes 2. Singapore - 1.8% - No 3. Australia - 5.6% - Yes 4. New Zealand - 6.9% - Yes 5. Switzerland - 3.2% - No 6. Canada - 7.2% - Yes 7. Chile - 6.2% - Yes 8. Mauritius - 7.76% - Yes 9. Denmark - 4.6% - No 10. United States - 7.6% - Yes The correlation is clear and perfect. All nations in the top 10 that have minimum wage laws have higher unemployment (significantly) than the nations with no minimum wage. The only exception is Hong Kong, but that's easily explained. It's simply far more free overall than Switzerland, so it's able to maintain a lower unemployment rate even with a minimum wage in place. It's minimum wage is also quite low (under $4 USD/hour), so it's probably a fairly ineffective price floor. When compared to a similarly free nation (Singapore), the correlation is once again clear. The correlation is also perfect if we consider overall economic freedom in addition to having no minimum wage. We have: 2. Singapore - 1.8% 5. Switzerland - 3.2% 9. Denmark - 4.6% Another perfect correlation. The more free, the lower the unemployment rate, given no minimum wage laws. Sources: Economic freedom index Country Rankings: World & Global Economy Rankings on Economic Freedom Unemployment rates Unemployment Rate | Country List Minimum wage laws List of minimum wages by country - Wikipedia, the free encyclopedia
Another thing I hear from proponents of minimum wage laws is that without them, everyone would only get paid just enough to stay alive and have shelter. Why is this not the case in Singapore, Switzerland, and Denmark? Their wages are for the most the same as other similarly developed nations who do have minimum wage laws. How is this possible?
I never claimed correlation equals causation. I'm just showing that a correlation does exist, since it's commonly claimed to not exist by proponents of minimum wage laws. It would be a correlation/causation fallacy if I claimed that these correlations prove the law that effective price floors cause surpluses. I made no such claim. These correlations simply serve as illustrations of the law in practice, not proof. If you don't believe these findings result from minimum wage laws, then give your own theory on what the true cause is.
There are so many other social and economic factors that you would need to take into account, such as principal exports and trading partners, education, geographic location, other laws, etc. And Hong Kong and Singapore are the top two not because they are more free, but because they employ the use of sweatshops.
How can you tell someone else to take into account more factors and then say: "It's because of sweat shops."???
Give your theory then. Just saying there are many other factors means nothing. So far no other theory has been put forth other than mine.
I'm not saying you're incorrect, and to the person above your comment I am not saying it is entirely because of sweatshops, but sweatshops are a major factor, if you look at supporters of sweatshops they almost always point towards these two countries as those that have benefited from sweatshops. And I don't have a theory, I am simply stating that all of those factors contribute towards what types of jobs are available and whether or not they are jobs that everyone can fill or if they are a specialized profession. I'm sure that minimum wage is a factor but I'm simply stating that there are other factors that can effect the availability of jobs as well.
Of course there are other factors. In my original post I said as much, but the primary factor is the minimum wage laws. I'm saying that these correlations are a result of minimum wage laws, not because of simple correlation, but because it's the best explanation according to economic theory. This statement can't be challenged unless a different theory or explanation is offered, and it's not a correlation/causation fallacy like Tunga implied.
I hear ya, but when the title of your thread is "minimum wage laws DO CREATE unemployment", then...well...you're asserting one creates the other. Perhaps you should change the thread title if you're only suggesting a correlation.
I can prove that MW laws cause unemployment without going into all that mind-numbing, statistical, infinitely-variable stuff. I've been self-employed since 1985 as a toolmaker. I have often thought of hiring a kid to clean up around my shop, but I have never done it. I'm a one-man operation so it (arguably) wasn't really necessary. However, had I ever hired another toolmaker, a part-time kid would have been a big help. But if I had to pay him whatever MW is now, ($8-9?) that would have prevented me from doing so. I would be forced to pay him a mutually-agreed upon cash amount under the table, but then risk having him get hurt and suing me or something because he wouldn't be covered under my insurance, so instead I would end up just doing the sweeping and cleaning myself. So there goes a job for high-school kid that would never happen because of the MW laws. The value of an employee is whatever he and the employer agree upon, not what some government bureaucrat dreams up.
The thread is discussing examples that further solidify the conclusion that minimum wage laws create unemployment. We don't look at evidence and then come to conclusions. We formulate hypotheses and then test those. This thread focuses on the findings of a simple experiment. The assertion that one creates the other can be "proved" using relatively simple logical deductions from a priori axioms. This thread doesn't focus on that, but rather the empirical evidence that supports these "proofs".
You still don't understand. Minimum wage laws do create unemployment. These correlations are examples of this law, but the law has already been proven by logical deduction from true axioms of human action. The data points in this thread are illustrations of the law in the real world, but not proof. The proof is the deduction from true axioms. All proofs of Austrian economics are in this form, they don't rely on empirical statistics. Austrian economics is a discipline of logic. Again, unemployment is caused by effective price floors, a conclusion previously reached by many economists (Austrian and classical both), this data shows those effects in reality. It's not a correlation/causation fallacy because the conclusion doesn't rest on this data as its proof.
Another post for clarity. There are many contributing factors to unemployment. My position though, is that these nations are similar enough to each other that those other factors can't account for such wide variances in employment and so the primary factor must be minimum wage laws. The only exceptions are the top 2 nations, which are both significantly more free than the bottom 8 nations, which explains why Hong Kong (the world's freest nation), even with a minimum wage, has a lower level of unemployment than Denmark, who has no minimum wage.