16449: Danier: Re: Minimum wage and its unintended consequences. (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Yves  Danier <yd5@columbia.edu>


As the cost of labor goes up so does the price of goods that are using
labor to produce them. As a result of this policy, inflation goes up and
national currency devaluates.

In the case of Haiti where GNP cannot cover
half of National consumption, most of consumed goods are imported. With
the implementation of a minimum wage that automatically increases labor
cost and Gross National Product remaining stagnant, you end up with too
much money chasing too few goods. In the end you get Price of
goods going up and Gourde value going down in value. What makes matters
worst,
since most of our consumed goods are imported, this new policy further
strenghten the dollar against the Gourde thereby making local and imported
goods more expensive to the small percentage of haitian who actually and
totally out of reach to the 70 to 80% of unemployed. This is a text book
example of a policy that does more harm than good.

thanks