Dawn of Venezuela’s Minimum Wage

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Revolutionaries and the opposition don’t see eye-to-eye on almost anything, but in their public pronouncements they both seem to care about one thing: making sure workers have a decent minimum wage.

President Chávez was a huge fan of the policy of raising the minimum wage to make it seem like he was improving workers’ wellbeing. In 14 years of government he raised the minimum wage 21 times, and President Maduro has maintained the push with a whopping 11 minimum wage increases in little less than 3 years.

But, to be clear, just like the exchange controls, price controls and many other forms of interventionism, the Venezuelan minimum wage was not invented under Socialismo del Siglo XXI. It is not a child of Chávez, much as chavistas might claim it is. It is also not the panacea our politicians think it is.

A brief history of Venezuela’s minimum wage

In 1958, the Law stated that the Executive Branch could intervene indirectly in the setting of wages. The Law on Collective Agreements by Branch of Industries, published in Gaceta Oficial No. 25,818 on November 21st 1958, stated that “the collective agreement in the labor-management agreement or the arbitration award may be declared by the National Executive of mandatory extension to other firms and workers in the same industry.”

The minimum wage itself was fixed for the first time by President Carlos Andrés Pérez in 1974 -ironically enough- vía Ley Habilitante (Enabling Act): ordinal 10 of Article 1 of the Enabling Act empowered the President to “enact minimum wage and increases in salaries, wages and benefits required to raise the living standards of the population and improve the distribution of income in accordance with the general policy that defines the National Executive.”

So, through Decree-Law No. 122 of May 31st, 1974 (published in Gaceta Oficial No. 30,415 of June 4th, 1974), Presidente Pérez set:

  1. A daily minimum wage of Bs 15. (Article 1)
  2. A monthly minimum wage of Bs 300 for domestic workers, when the employers earned over Bs 4,000 per month. (Article 2)

Fast forward 5 years and in 1979 Congress passed a General Law for the Increase of Salaries, Wages, Minimum Wage, Retirement and Old Age, Disability and Death Pensions (Gaceta Oficial Extraordinaria No. 2,518 of December 3rd, 1979). This law set:

  1. A daily minimum wage of Bs 30. (Article 6)
  2. A daily minimum wage of Bs 25 for workers engaged in agricultural and livestock activities. (Article 7)
  3. A monthly minimum wage of Bs 500 per month for domestic workers.(Article 8)

The love affair with the policy continues to this day. From 1984 until today, Presidents have continued to write Decrees to fix new minimum wages. Between 1974 and 1998 the urban minimum wage was adjusted and set 13 times: less than one per year. Between 1999 and March 2016 there have been 32 increases in minimum wage: nearly two per year.

It’s undeniable that Venezuelans are pretty much used to having a minimum wage fixed by the President, and they even applaud the fact. But, why?

The answer is rooted in the According to Chi-Yi Chen, the “direct intervention of the Venezuelan State in fixing wages reflects certain positions. These are: a) The worker is always exploited; never gets his due; b) The employer is enriched only through the exploitation of labor; c) Following the above two positions is conceivable that the only mechanism to equitably share the  surplus of the productive society is to compulsively impose a certain level of remuneration. The history of state intervention in recent decades exactly reflects these ideas, obviously influenced by the Marxist conception of capitalism.”

But is it a good idea?

When the first minimum wage was set in 1974, there were concerns. According to Hector Valecillos Toro,

Superficially, the measure seemed justified and could be seen as a discretion in favor of fair participation of workers in the sudden oil wealth. However, viewed less emotionally, it was clear that it wasn’t convenient to rush into a measure that often cause problems of a different kind.

First, because under President [Rafael] Caldera the inflation pace begun to accelerate (which, let us not forget, had been absent from the country between 1950 and 1969) and it wouldn’t be easy to circumvent the upward impact on prices of such decision. Second, and perhaps foremost, because the government chose a highly inconvenient mechanism to pay the staff, which by definition dissociates compensation and labor productivity “.

To understand these points better, let’s take a quick a pretty simplified trip down economic theory lane. Of course the academic debate over the impact of minimum wage laws continues to rage and the literature is enormous, but this is the bare-bones standard model people refer to when they participate in that debate.

A fixed minimum wage supposedly seeks to ensure that formal workers have a minimum monthly income to cover the basic needs of his family. So the minimum wage is increased when the old wage becomes insufficient to meet this goal.  

But there is also the market equilibrium wage, the wage that would result if labor markets were allowed to work unencumbered. This wage would reflect the productivity of workers in each industry, and the particular dynamics in each market.

If, for example, a minimum wage is fixed above the market equilibrium wage, many more individuals will be willing to work than companies willing to hire them. Companies would have fewer incentives to recruit new personnel, thus increasing unemployment. Whether this is important or not will depend on the other factors affecting labor demand and supply.

In contrast, if a minimum wage is set below the market equilibrium wage, companies will want to hire more staff, but many individuals won’t have incentives to fill such positions at such low salaries. Ultimately, the minimum wage ends up not being used much. And let’s not forget that the supply and demand of labor force in each productive sector is different, so the equilibrium wage of each market is, in turn, different.

Fixing a minimum wage that does not correspond to the market equilibrium wage will generate distortions – the debate then is about how deep those distortions are, and whether or not there are benefits tied to them. And fixing it exactly at the equilibrium level is practically impossible, because nobody knows what that level is.

The important point is that wage levels should, above all, have some relation to workers’ productivity. If this condition is not met, an increase in minimum wage will ultimately translate into unemployment, and in an inflationary context, the minimum wage will become insufficient, the Central Government will probably increase it and the distortion game will begin anew.

In 1993, Chi-Yi Chen wondered “has the minimum wage really played the role that it was assigned, that is, to maintain a socially acceptable standard of living?”

The current minimum wage in Venezuela is at BsF 11,578 plus BsF 13,275 in food benefits. While this wage doesn’t cover the basic food basket, it also represents a substantial burden for formal companies, given the deep price distortions and controls under which they operate and the excessive labor regulations that stifle productivity.

Ironically, the minimum wage actually becomes an obstacle to formal businesses, reduces the number of quality jobs and creates incentives for formal workers to seek better wages in the informal market. Venezuela is then stuck in the worst of both worlds: with a minimum wage that is too low to afford basic necessities, and too high for companies to bear given the terrible business environment workers operate in.

We should all remember this: every time the government announces a new rise in the minimum wage in an inflationary context such as ours, it means that it has failed.

Raising the minimum wage is nothing but a means to an end. Raising the minimum wage with no concern for productivity should not be the goal. Raising the minimum wage while doing nothing to stem inflation is close to useless.

The goal should not be to raise the minimum wage per se. The goal should be to not have to raise it.

39 COMMENTS

  1. So, are you saying that for example in the United States it is a bad idea to have a minimum wage? Currently in New Hampshire it is $7.25. This is a salario de hambre, but what would the benefit be of eliminating it? The idea is ludicrous. It is too bad that opposition to “Socialismo” often veers into unabashedly embracing right-wing “ideals”.

        • You dismissed the idea of a minimum wage-less developed economy as ludicrous. I demonstrated to you that a minimum wage-less economy can include some of the strongest social protections in the developed world – enough to be hailed as a model of democratic socialism by the U.S. far left in the voice of Bernie Sanders.

          • That works if you have a skilled and educated workforce. If you have a lot of unskilled and under educated workers wages will go really low.

          • According to the article, Danish workers are 85 percent unionized and workers are covered by sectoral agreements. This is an interesting example because it points to a decreasing need for minimum wage where there is a mechanism in place to address imbalance in bargaining power between individuals and employers- the mechanism being collective bargaining.

            Similarly unionized employees in North America do not need a minimum wage, but they account for a very small proportion of the workforce. Hence the need for regulation.

            The Danish example shows exactly why minimum wage is needed. Interesting example.

          • I see the same thing. An employee of mine is a valuable asset to my company, and I am a valuable asset to him – but not more valuable than his work and productivity. It’s my responsibility to assign work which he finds interesting and can do, developing his own abilities, learning, becoming more productive. Business is competitive. If he finds better pay elsewhere, that’s my loss, in some instances, a big one, but pay isn’t the primary motivation.

          • Of course the educated and skilled workforce may have something to do with free tuition and like 900$ month per student, no need to pay it back, is not a loan.

          • Gringo,

            You are speaking of a situation in which both you and your employee are much higher on the scale of Maslow’s hierarchy of needs (https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs) than currently exists in Venezuela. At the moment, simple survival is paramount. Personal and professional growth, emotional satisfaction, and self-actualization are luxuries that Venezuela workers cannot afford at the moment.

          • No Francisco, that is not what I wrote, try one more time? What I wrote was that it was a ludicrous idea to do away with minimum wage in, for example, the United States. I did not say that it was overall a ludicrous idea. I was careful to talk about a specific example and not make grand statements, which are normally useless. Anyhow, normally your tone is more friendly, did I do something to you?

    • Actually no minimum wage for a service works – for example in the USA telemarketers are offered starting wages per hour of between 12 and 25 dollars an hour depending on the company who needs the people. It is that simple. If a company does not offer enough money no one will apply or work for them. The people go work for the employer offering the highest wages.

  2. I appreciate the article, but minimum wage is not exclusively a Venezuelan concern, not even close. It exists because workers *are* willing to work for less-than-living wages, and there’s a public interest in preventing that. Ditto Nelly on anti socialism going a little far.

    • If someone is willing to work for X, what gives you or the government the power to decide if it’s good or not for the worker? What if he’s a youngster with no wife and kids to support and just wants to earn a little for him or as contribution to his household. What if he wants to take the opportunity to learn how to do something at this job, work hard, get better at it and get a raise? The fact that you start off earning seven bucks doesn’t mean you’ll still be earning seven bucks in a year or two.

      One of the main problems with socialists is that they feel the government must take care of us all. They’d rather have a bureaucrat make a choice for them. The bureaucrat suffers no consequences if his choice on your life is wrong.

      • Tell that to the people who work three jobs at minimum wage to support their families. What you say sounds great in theory, but the realities of the workforce are not as cute.

        • Nobody should work three minimum wage jobs to support their family. Minimum wage jobs aren’t designed to support families, they’re designed to support an individual who is trying to learn a trade or is in an early transition in their life. Rather than concentrate resources on keeping people paid a minimum wage in a service industry job, folks should pour resources into the kind of training and education that lifts people OUT OF minimum wage jobs. Minimum wage jobs shouldn’t be a destination. Anyone working three minimum wage jobs to support a family is simply tilting at windmills. (in a functioning economy)

          • That sounds nice in theory, but in practice, people work at what they can find, if they can find it. And companies dont care one bit; why should they, I mean, is not like they are going to tell you “this is not a job for you, I’m searching for somebody that is not as desperate for the money”. In fact, that would be discrimination…

            As always in politics, you have maximalist and minimalist utopian positions, and you have reality. You can screw the economy by too much regulation, you can screw up the economy (or the lives of some people in the economy) by too little regulation. And the correct amount of regulation is something nobody knows exactly, you just have to keep an eye on things and adjust. A minimum wage is a good tool when you use as part of a good toolset and with good, pragmatic knowledge.

            In the hands of people like the Chavistas is just another screw up.

        • People need to make up their minds. Are price controls bad for ANY economy? Do you acknowledge that much? Well, the minimum wage is a price control. Why would it be good if the rest of price controls are bad?

          Oh, you think a minimum wage is “necessary” to “protect” workers? Why don’t they set a minimum wage of two, three or five thousand dollars a month?

  3. imposible no estar de acuerdo… al margen de esto y como curiosidad, ayer vi el documental Araya (lo tienen este mes en mubi.com) y me llamó la atención un grupo de mujeres discutiendo el precio del pescado. En el año 59 con un bolívar se podía comprar pescado para toda la familia. Ya sabemos lo que vino después. La vida en ese pueblo no me pareció muy distinta de la vida en un pueblo español en los años cincuenta o sesenta pero España y Venezuela han seguido caminos muy distintos desde entonces.

  4. Its part of a bigger problem, in Europe and other places the pols want to protect workers from abusive employers who use their superior bargaining power to impose wages or working conditions than dont allow the worker a half decent life so they establish minimum wages which it is assummed all employers are capable of paying ( at the same time the pols reap the political rewards of benefitting the large mass of voting workers) , then they go on to establish additional benefits which (while giving them more votes) make having permanent employees a heavy burden on the employer such that they forego the hiring of such employees and instead hire part time labour which they can get rid of easily and dont cost them as much .

    This means that in places such as in Spain an ever larger portion of the working popularion work as part time employees so they can never hope for a better life…the effect of legislating very generous labour benefits is that half the workers never get to work under decent conditions of stability because they cost too much.

    At the same time sometimes the labour burdens are so heavy that the employing companies become uncompetitive or even inviable in th emarket in which they operate which hurts the economy as a whole by stunting investment and economic growth .

    You are dammed if you do and dammed if you dont ……..in a populist regime what matter is getting the maximum vote regardless of the overall adverse effect on the economy , while in a very business friendly regime you can have situations where the workers are ill treated to make the businesses more profitable .
    (even where the business can do better) .

    The problem of course is that in many country the political agendas of the pols and rulers are so prioritized that they become blind to their overall responsibilities towards the economy that they grant workers more benefits than the economy can afford.

    Managing these dilemmas is difficult and there is no ready made recipe to doing so with guaranteed balance and wisdom !!

    • “This means that in places such as in Spain an ever larger portion of the working popularion work as part time employees so they can never hope for a better life…the effect of legislating very generous labour benefits is that half the workers never get to work under decent conditions of stability because they cost too much.”

      That is also a bit more related with the same politicians that in theory “gave” the benefits ensuring the employees can keep the abusive practices by moving to temporary employment and other forms of, basically, fraud against the worker. Like interns that have been at it for 5 years…

      The best tools, in the hands of crooks and idiots, are not going to deliver the best results. Venezuela and Spain share that trait, with Venezuela a lot ahead on the competition for World’s worst politicians and Spain a champion in Europe in the same contest.

  5. IMO: The minimum wage, as a method to protect workers, is a crude and unwieldy weapon. It often does more harm than good. Furthermore, it is regularly abused by politicians as a method of currying votes at the expense of the general economy. But, so long as the economy is doing well, and the minimum wage is kept at a level that applies to only a small percentage of the workforce, the damage is tolerable. In Venezuela, however, the minimum wage applies to a very large portion of the formal workforce (I am not sure how much… 50-60%?). Even among those who earn more, their earnings may be pegged proportionally to the minimum wage. So an increase in the minimum wage has an instantaneous impact on production costs and thus to prices, thus eliminating at nearly at once the increase in purchasing power created by the increase.

  6. Roy I envy you your communicative skills , youve said what has to be said in one easy to read paragraph ……!! One thing I notice is that different areas of the economy have differing cost income structures so that some can pay more than others , as you say where a particular economic area is doing well then you may even dispense with minimum wages because most people are getting paid above that any way……believe in some countries you have employers associations in a given economic area bargain wage and certain conditions with associations which represent workers in that area. So its not the Governrment but industry wide associations which handle this kind of issues , seems like more efficient and equitable than having one size fit all wage regulations , dont now however how you handle this kind of thing in a country like venezuela where so many depend on the minimum wage and the govt has a direct interest in acting irresponsibly if it suits their poliitcal goals ….!

    • Thanks! I am glad I was clear, although my comment didn’t lead to any particular recommendations for Venezuela.

      In the aftermath of the coming political and social implosion Venezuela will have to engage in a national debate regarding what type of country it wishes to become. Generally speaking any society has to decide where on the spectrum they want to be: A country with unlimited personal opportunities and no safety nets, a country with extensive social protections and limited opportunities for personal success, or somewhere in the middle. You can’t do it all. One direction comes at the expense of the other. The fastest way for the country to recover economically is to opt for fewer regulations and worker protections to promote investment and job creation. If you try for the middle course in the short term, the recovery will be still-born.

  7. If labour markets are allowed to work ‘unencumbered’, you don’t actually see the efficient distribution of better wages to the more productive. You see a race to the bottom due to the inherent imbalances in bargaining power between an individual and the employer. Minimum wages set a floor to this race to the bottom.

    Venezuela is hard to figure out. It seems to me the less productive a person is in Venezuela, the higher may be their status and income potential. Labour markets are distorted by the fact that there is a lot of monopolistic behaviour in the private sector, and the public sector is itself a collection of giant monopolies. That would weigh in favour of wage regulation. I agree though, these minimum wage increases we are seeing are not victories because people’s spending power is spiraling down as wages go up.

    • “Minimum wages set a floor to this race to the bottom.”

      You should tell that to the half of Latin America working in the informal market then. They seem to not be aware of that.

      Whenever someones tries to sell me a soda can when I stop the car at the traffic lights, I will keep repeating to myself: “Minimum wages set a floor to this race to the bottom, this can’t be happening, this is a delirium! Thank God for minimum wages!”

      If minimum wages are already bad in the developed countries, in the developing ones they are a total disaster!

      • Marc,

        Your comment applies equally to health and safety legislation. From time to time I meet (Latin American) workers who are seriously injured at work. Their employers, in addition to not paying them in accordance with what they contracted to pay them, or what legislation requires them to pay, also do not purchase safety equipment or provide them with training, and expect them to work in unsafe conditions. (With cleaners for example, they sometimes are sexually assaulted on the job working late nights in offices, por ejemplo).

        Its really all a problem of the regulator playing a role that the markets can address. These people choose their jobs, according to the conditions the market has determined were appropriate. If the conditions include sexual assault, or not getting paid according to the contract, or at all, well…let them get an education and move up into a safer profession. Let them bargain a better contract according to what the market determines.

        I think the answer is that health and safety legislation is a failure, as with minimum wage, and it would be better to leave these things having to do with conditions of employment to the market to determine. Any failure on the part of the regulator to pick up on these things is just a product of government trying to do things it is not supposed to do. Any interference in the markets will cause more unemployment.

        So yes, let’s throw out minimum wage, and let’s throw out other regulations on minimum working hours and safety requirements as well, because they just run against the unavoidable realities of the labour market. These are job killers.

  8. Minimum wage is only but one of the many Medusa type serpent heads… Prestaciones sociales, antiguedad, bono salud, cesta ticket and all others new and old measures make the labor market extremely expensive, and lacking in flexibility.

    In a society nor driven to productivity and competitiveness it sound good, its a populist sound bite and it sells.

    Venezuela’s problems are structural and most have to do with dependency on oil as a petrostate and under education society.

    hard to analyze anything without being systemic IMO.

  9. I still remember one of the last increases in minimum wages dictated by the corpse, he said more or less:

    “And now, I hence decree the raise of, TWO percent in the minimum wage… Ah, you whitted on your pants, right, trolololol! Just kiddin’! That would happen in a CAPITALIST economy, such as that of the fourth, where people was exploited by the white anglosaxons… (yadda yadda yadda jibber jabber blah blah blah for like half an hour)… So, I decree the raise of THIRTY percent of the minimum wage, because that is the socialism! Where worker class has a…”

    And then he followed a stupid monologue that basically amounted that “In socialism everybody is rich without having to prepare nor to improve in anything!”

  10. The minimum wage is yet another naive “feel good” socialist policy that pretends to help people, but ends up with similar results as compulsory employer-paid maternity leave: an increase in unemployment for the ones supposedly “helped” by so much generosity: the people who produce less than the government believe that they deserve to earn, who won’t find any jobs, and by consequence earn no wage, what is obviously less than the minimum wage, and then they will be forced to ask the government for welfare to amend the situation created by government workers themselves.

    Bill Bass mentioned Spain above, and Spain is probably one of the best cases we have of how the previous generations can close the doors for the next ‘lost generations’, all in the name of goodness, equality, fairness, kindness, of course.

    In Spain you can, theoretically, earn a good wage set by the government, and together with Greece and Portugal, enjoy the most generous work regulations and benefits in all Europe, all set by the government too; the only problem is that you won’t find any job, and in addition the economy will collapse around you at some point. Thus, you will have no other option than to leave your family and all those great socialist policies behind to start a new life in a new country. Sounds like lots of fun.

    There are politicians that go as far as saying that a minimum wage of thousands of dollars would erradicate poverty. And that if you don’t agree with it, you hate workers, you capitalist pig!

    • This is the same kind of idiocy as Chavismo but from the other side.

      Just for starters, people in Spain dont find jobs not due to the amazing benefits that make it so hard to employ them; they dont find jobs because the country crashed after a gigantic housing bubble, austerity measures inside the Euro dont help with the fall in demand after said crash, and all the supposed work into “convergency” with Europe has been shown to be a lie, because the economy is geared toward easy low-value areas like construction and tourism, as always, with very few advances in higher value added activities.

      Measures like minimum wage, maternity leave and compensation, etc, are necessary on a working economy to help people and avoid abuses. If you have a non-working economy, they dont work magically and raise standards of living just because the government say so, and they dont destroy competitivity and jobs just by existing.

      Those measures are designed to ensure part of the wealth created goes to the workers; if your politicians ensure your country does not create wealth but destroys it, that is a more fundamental problem, be it by being idiots that dont understand (or dont want to understand) what inflation is or not being able to see what is the difference between real prosperity and a bubble.

  11. I understand that in Germany when a company is planning to fire a large part of its work force the govt might step in and pay the company a kind of stipend to keep their workers employed and thus save money on what it would cost it to pay them full unemployment benefits !!

    There are two countries which provide the least protection and benefits to workers , one the US where the philosophy seems to be that if you make it easy for business to fire people the economic climate will be good enough for the terminated employees to be employed by another business some time later , at least thats the theory , not sure it always works out.

    The other country is Cuba where the labour laws are very backward , the same as Venezuela had during the 30´s , of course the govt takes care (sort of) of everybodys employment (at miserable wages) , and provides all with (very substandard) housing, education and health care.

    • A woman from Germany explained that companies have to be very careful increasing salaries and wages because they push employees into higher tax brackets and may end up in an effective reduction in take-home pay. They may have fixed that, since I heard that. And firing an employee who is a dud and a detraction from productivity may be very complicate in some countries – I believe France is an example of that – you have pay them some sort of “transition” period of wages. The unemployment rate amongst those under 30 in France, a prime example of a “socialist” country, is somewhere over 25%. The story I heard is that people are reluctant to hire the under-30 crowd because these are young and “volatile” (change jobs, etc.) and the employer commitment is too high to make it a worthwhile proposition – I would assume there is a lot of “informal” work done, part-time or sub-contract work, which is the free market’s work-around to “government” irrational interference with private commerce. In Venezuela it seems the bachaqueros demonstrate the ingenuity and energy which, in the absence of stupid “government” could restore a free-market economy. One must examine the real objectives and motivations of those who would “govern” – do they want to provide an orderly environment, or do they merely want “power” and “adulation”?

      • In europe you are either overprotected or even collymodled (as a full time employee) or you are exploited and only allowed precarious employment so you can never earn enough to buy a home or a car or know any security ………one is linked to the other because employers are so afraid of the heavy burden and troubles of having full time employees that they would rather have few of those and many hand to mouth employees they can just fire any time they want. .

        In the US every day that passes there are more employees in the second category , productivity increases allowing for more benefits to the common workers but the lions share of the wealth created by such increases in productivity go to remmunerate the already over remunerated….thats why people are getting fed up with the loss of the american dream and the stagnation in the wages and stability of most middle level jobs. Something is not working quite right and the kind of new populist candidates which are now gaining such political importance are a sign of that ………!!

        The normal way you distribute your work force is that you have permanent employess to take care of steady work your company must produce on average and have a floating population of part time workers to cover peaks and variations in your work load which are likely to be transitory or even ephemeral. Thats not whats happening in Europe !!

  12. Great article. Looking at the practicalities of the theory, unafraid to examine history, unafraid to examine facts, and unafraid to challenge irrationality.

    One major flaw in people’s thinking is the definition of “government.” People tend to view it as some disembodied “ultimately responsible entity” which can be blamed or praised. In my conception “government” should provide an environment in which the people who compose the country can work and follow their own course in life, based on their own decisions and their own merits. The “government” is not responsible for ensuring my success or failure. That is MY province, thank you very much. Conversely, I am not responsible for any other individual’s decisions – that responsibility is more along the lines of religion, than government, which is probably why socialist-communist governments are so violently, murderously, opposed to religion, and instead promote the idolatry of single individuals as “father figures.”

  13. I think you can’t divorce this from the huge deficit and fiscal irresponsibility that’s been a state policy in Venezuelan since the 70’s. Although it is very interesting introducing the discussion about a minimum wage, the problem in Venezuela is not per se the existence of a minimum wage (and I think it might be alienating even though you are making a very good point ), it’s the fact that the wage is frequently raised without any consideration to an increase in productivity and almost always above inflation rates, if we ever overcome this macroeconomic disaster one of the most difficult things to explain to people is that in a sane economy with a single digit inflation the minimum wage can’t increase 30% by year.

    • This is just my impression, but while most of the people commenting went NO MINIMUM WAGE !!!!111!!!, the authors decided to end the article with:

      “The goal should not be to raise the minimum wage per se. The goal should be to not have to raise it.”

      Which… implicitly means you have a minimum wage.

      It also implicitly assumes your economic policies are not madness and you know how to keep inflation into a workable level and a lot of assumptions that are not possible in Venezuela.

      • The problem is not having a minimum wage, the problem is fiscal and monetary irresponsibility, which was not invented by chavismo (btw after Macri we are the only monetary irresponsible money printing economy in the region)

  14. Oh I love this subject almost as much as I do the bachaqueros.
    This is one of those subjects that is so hard to understand because it is so counter intuitive.
    Even people that know well that price controls are bad can’t see why minimum wage is bad.

    The key is to understand that minimum wage is nothing more than a price control, and just like price controls generate scarcity of the controlled good, minimum wages generate scarcity of employment. And so the very people that were supposed to benefit from the policy are hurt by it.

    The argument that the minimum wage prevents abuses from the employers is basically true, because the unemployed are not abused by any employer. But you know what is worse than working in a sweatshop? No work at all. No legal work that is.

    By the way minimum wage is one of things that is hurting the US economy and making it noncompetitive.

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