As free-market economists I am not much into minimum wage laws, in fact I am quite against them. However as I watch what's going on in China right now, with the protests and strikes from the labor at the foreign manufacturing companies which are inside their country, I see that something must be done. In China you are not allowed to go on strike at a Chinese company, and even though there are often problems, they are not publicized because the Chinese government doesn't want that in their media.
Still, it is my contention that Henry Ford was correct in his thinking and strategy as he began to mass produce Model T's. He paid the labor enough money so they could afford to buy Ford automobiles, that makes sense. And although I am not in favor at all of minimum wage laws, in China's case - if they don't do something they will find themselves in a world of hurt and employee riots and protests. Industrial Revolutions have cycles, all that has yet to play out in China, don't kid yourself, it's unavoidable, and they've done absolutely very little to stave it off or lessen its potential effects, it's a time bomb for their economy and national stability.
Do you believe that my comments are hypocritical, that on one hand I pose this question; "Does China Need a Minimum Wage Law?" and then on the other hand I say I am against minimum wage laws? Well, my comments aren't hypocritical, and let me tell you why; because I believe the free-market should control labor wages, and that businesses should compete in the free-market as well, but in China it's not a free market, and the way they run the labor there is shall I say; "interesting."
This latest ploy to get employees to rebel using the media in order to make US and Japanese companies with factories in China look bad due to suicides and low pay rates has completely backfired. Now, Foxxcon has doubled the pay of the workers, and Honda raised the pay by nearly 50% in their Chinese factories. There was an interesting article in the Wall Street Journal; "Chinese Workers Win Wave of Raises," by Andrew Batson and he postulates, as does some of the people he interviewed; that the writing is on the wall; "no longer can companies rely on China's cheap labor forever."
Now I have another comment, we know that all nations go through periods during their growth of industrial revolution, and angry labor mobs causing riots and such. This is the last thing China needs, as it experiences 8 to 10% growth year-over-year for the last three decades. Inflation, low wages, poverty, is taking its toll and it will divide the classes, and cause conflict from here on out.
We have already seen that many Chinese companies are investing in countries like Egypt where there will be cheaper labor ($1 per day still) when they can no longer afford to pay the new labor rates in China. It seems that many of the factories are looking for the lowest cost labor, but at some point they have to pay people what they're worth, and they cannot continue to drive slave labor. Things are changing in China, China is growing up. Please consider all this.
Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes it's hard to write 20,000 articles; http://www.bloggingcontent.net/
Note: All of Lance Winslow's articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers.
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