Monday, June 13, 2005

Abolish the Minimum Wage

Being part of a world community requires countries to compete with each other for employment. It’s funny how that all works out. Now, governments are like interviewees before entrepreneurs trying to qualify for job openings. Businesses determine whether a country’s tax levels, level of regulations and bureaucracy and flexibility of the local labor market make it an attractive location for investment.

One of the reasons why the US got away with its high level of taxes and bureaucracy since the infamous 30’s was that America was the freest nation of its time. Why would anyone relocate their business to countries where there was no rule of law just because of higher taxes? But that is all changing as more nations engage in trade, respect property rights and become freer.

That is why American Samoa can no longer consider itself isolated from the rest of the world. Nations in the South Pacific, Asia and South America are competing for the tuna industry. Their governments are doing everything they can to be more business friendly. If one country imposes higher taxes and regulatory measures, investors would take their capital, entrepreneurship and ideas elsewhere literally overnight.

In the meantime, prices of tuna are going up as its stock goes down. Mainland consumers, who have to scrounge up money in their battle with inflation, want cheaper tuna to lower their annual living expenses. The tuna industry is trying to meet the demand for lower prices while it faces rising costs of not only fish, but of also gas and other expenses. Tax credits may not be enough this time around.

The minimum wage will have to go.

On its way out, we can thank it for discouraging people from improving and moving up the economic ladder. With the minimum wage and rigid labor laws, employees get an occasional raise for doing nothing. We can also thank it for creating unemployment, as many unskilled workers cannot find entry-level jobs because businesses can only afford to employ so many at the minimum wage. But hey, if you volunteer, then it’s alright, but 50 cents or a dollar an hour to help you out while you “volunteer” would make your help illegal. What nonsense!

We can thank it just one more time for making it harder for small businesses to compete with bigger, more established ones. Big businesses love minimum wage increases because the law drives their smaller competitors out of the market and discourages others from starting up new ones. At the same time, employers have to raise the price of their products to pay for the across-the-board rise in wages. When the minimum wage goes up, so does inflation.

The ASG can make our territory more economically viable by throwing in the kitchen sink. Abolishing the minimum wage would not only make us competitive in the global market, but would also make our local workers, businesses and markets more competitive, productive and successful. The minimum wage destroys jobs, encourages people to make careers out of positions most consider temporary, shuts down small businesses and discourages others from becoming entrepreneurs themselves.

It's time for it to go.


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