Living in Alberta most of my life, I have seen this cycle more than a few times: 1) The government wants to raise the minimum wage, 2) the business community lobbies the government that a raise in minimum wage will kill jobs, 3) the government raises the minimum wage anyways, and 4) any job losses are hard to measure.

If we assume economics is mostly based on the supply and demand curves from Economics 201, job losses are the expected result. But this does not happen. Here is my hypothesis.

When you give a low-wage worker a raise, that raise stays in the local economy. Such workers have more money, but they are not likely to travel outside the local economy. So they are able to buy more Big Macs and lawn gnomes at Walmart. So these companies do not lay off their minimum wage workers because more stuff is being sold.

Give a person from the managerial class a raise, he will spend more time at a resort in Mexico — or buy a German sports car. His raise leaves the local economy — and does not help low-wage workers.

Dave Volek is the inventor of “Tiered Democratic Governance”. Let’s get rid of all political parties! Visit http://www.tiereddemocraticgovernance.org/tdg.php

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