Monopoly and Competition (by Murray N. Rothbard)

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.@NZGreens do not understand business: minimum wage for contractors version

The Greens are most upset that a Labour party private members bill to specify a minimum wage for contractors was voted down by one vote in parliament yesterday.

If you earn than the minimum wage as a contractor, that is a signal wrapped in an incentive. Your poor hourly earnings is a signal to you that maybe you should get out of that contracting business and go back to being an employee where you will be paid at least the minimum wage.

Many small businesses make no profits at all in the first year or so as they build the business. The founders of the business get by on savings, which they anticipated when they drew up their business plan. No one expects a business to make an immediate profit or always be profitable.

Contractors are entrepreneurs chancing their arm. They need crisp signals about whether they are succeeding, failing or could succeed if they try harder or do something different. A minimum wage for contractors masks those important market signals of success and failure.

If your dream of owning your own business is not even paying the minimum wage, maybe it is time to get out of the contracting business.