Comment 28136

By A Smith (anonymous) | Posted January 11, 2009 at 21:20:46

Grassroots, wages reflect the skills that workers bring to the table as well as the current demand for those skills. By installing artificial wage controls, you limit the development of those skills and you decrease the demand for them.

If workers and businesses were allowed the freedom to set wages, workers would work more, develop skills faster and therefore increase the market value of their labour.

Businesses would benefit from market based labour prices because it would allow them to hire more workers, thus increasing the output of their business and also the potential for profits.

When you combine a business environment where workers develop skills quicker and where business output expands quicker, you end up with a market that can pay workers much higher wages, simply because the real output produced by the economy allows for it. That is the key to all real wealth gains, how much businesses can produce in real output.

By putting an artificial floor on wages, you limit the skills workers can develop, thereby decreasing real output in the economy, which can only lead to less wealth for everyone, both businesses and workers.

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