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Op-Ed: Vic Fedeli should propose eliminating minimum wage for youth

This week, Member of Provincial Parliament and Finance Critic Vic Fedeli released his “Ontario First Action Plan” as part of his bid for the PC leadership. One part of his proposal is generating some buzz and turning heads: eliminating the provincial income tax for workers under the age of 25.

According to a press release, this element of the plan is designed to improve the province’s weak economy and protect the financial and social future of Ontarians. At a time when young Ontarians are having a tough time getting well-paying jobs and are straddled by large sums of student loan debt, Fedeli believes these individuals need a tax break.

“Giving our youth a tax break will help them get ahead, here in Ontario. The extra disposable income will help pay post-secondary school expenses or put them in a much stronger financial position as they begin their life,” said Fedeli in a statement. “Ontario’s youth are our best hope for the future. When we keep our young people here, the benefit of building a stronger economy and healthier social fabric for all families, will exceed the small cost of offering this program.”

Fedeli’s team estimates this plan will cost the province of Ontario about $354 million.

Is this scheme a good idea for Ontario? Yes. Anytime that a politician puts forward a plan that eliminates or reduces a certain tax, no matter who it benefits, should be supported because that means the government has less money to steal from you, your neighbor, your colleague or your children.

Wynne’s Grits already have a deplorable track record of squandering billions of dollars — eHealth, ORNGE, MaRS, power plants, Presto, Pan-Am Games and the list goes on — so if there’s less money for them to burn through then all the better for the financial health of Queen’s Park.

However, if Fedeli really wants to help the province’s youth then he should go a step further: eliminate the minimum wage.

Indeed, it would be political suicide to endorse such a policy, especially in today’s political climate and the general left-wing mindset of millennials. But if he truly wanted to run a principled campaign then this measure would definitely assist the 18-25 demographic that needs jobs.

Right now, Ontario has the highest youth unemployment rate in the country with (officially) 16.5 percent, and that number is a lot higher for young men (18.6 percent). This significantly high figure is primarily due to the fact that companies have to pay their employees a minimum of $11 per hour to perform remedial tasks.

As the minimum wage increases, businesses are going to be increasing their qualifications. If they’re being forced to pay a certain wage then they’ll seek out the most experienced, skilled or educated. In other words, a minimum wage is “compulsory unemployment” for the unskilled, uneducated and youth.

Countries that have dealt with severe levels of youth joblessness have already experimented with this idea, or at least have discussed it. Why? Because they realize the minimum wage, especially for the youth, is a job killer and it protects the artificially overpaid union workers from outside competition (but that’s a discussion for another day).

Here is what economist Murray N. Rothbard wrote about the minimum wage:

“In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.

“All demand curves are falling, and the demand for hiring labor is no exception. Hence, laws that prohibit employment at any wage that is relevant to the market (a minimum wage of 10 cents an hour would have little or no impact) must result in outlawing employment and hence causing unemployment.”

It’s time to take drastic steps to overhaul this now have-not province (thanks Dalton McGuinty) and this is one measure to start revving up the labor market that is already experiencing an exponential influx of millennials. Fedeli will likely lose to Christine Elliot as PC leader so he has nothing to lose by introducing this economic concept to the masses.

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