THE MINIMUM WAGE

The minimum wage remains a popular but controversial policy instrument. This chapter addresses two issues in the minimum wage debate. The first is about the value of the minimum wage. What should the minimum wage be for: does it enhance the efficiency of the labour market, redistribute income (at some cost to efficiency), or protect other social goods such as respect and dignity at work? This first issue also asks how efficacious the minimum wage is at achieving income redistribution, especially in light of alternatives such as income tax. The second issue examines the minimum wage in the larger environment for regulating employment standards. Strong unions, which set minimum wage standards through collective bargaining rather than legislation, fear that statutory minimum wages undermine union power. This attitude questions the wisdom of legislated minimum wages, which may have the unintended effect of making it harder for weak unions to rebuild themselves.