What is dead weight lose?

Dead weight lose is the basic concept of Economic 101 in university course, maybe in high school. The simple idea of dead weight lose is that when Government intervene the market by price ceiling or floor policy. The  economical benefit of the society will be reduced.

For example, if a staff worth $20/hour, properly the boss will hire the staff with $20/hour. If boss only offer $19, staff will properly not work for him. In the other hand, boss will not hire the staff over $20, it is simple because the staff not worth that much. Therefore $20 is a point we called "market price".  If there is a wage floor, we called minimum wage, say it is $25. The boss have to pay for $25/hour to hire a staff. Therefore, the person who are not worth $25, they will be fired. Some people may not be worth for $25/hour and  they are willing to work with lower wage. However they still cannot get any job in the market because there is a floor wage. Those people will be unemployed even they want to get a job. Finally, the market will lose a part of workforce they are willing to work with less than $25 and a part of workforce who are not worth that much.

Still unbelieved in it? Ok. Hong kong is now showing a funny drama. Here is a clip of news from SCMP on 7 Apirl 2010. Let's see what those BOSS said.

The HK$11 noodles that may soon cost you HK$15
Paggie Leung  Apr 07, 2010
James Wong's noodle shops sell most dishes for HK$11. Make that HK$15 if Hong Kong's first minimum wage is set at the HK$33 unionists want, he says. Wong, who operates four restaurants and will open another next month, says he will have to pay his 20 staff more than HK$640,000 a year in additional wages. "And that does not include the pay rise for other staff. I'm now paying my chefs HK$33 an hour. If the waiters get HK$33, I will have to pay the chefs at least HK$40 an hour, right? They can't be given the same salary because they are more skilled," he said. "Imagine how many bowls of wonton noodles I will have to sell to cover that expense." He pays the staff at his four restaurants and a food factory on Hong Kong Island - mainly waiters, waitresses and cleaning staff - HK$6,500 a month. This works out at between HK$23.20 and HK$24 an hour, as they work 10 hours a day, 27 to 28 days a month. At HK$33 an hour he would have to pay them about HK$9,000 a month which, including higher Mandatory Provident Fund payments, would add up to an additional HK$640,000 a year, an increase of about 40 per cent. His part-time staff earn between HK$25 and HK$30 an hour. "The HK$33 rate is too much and if the minimum wage is set at that amount, we will have to charge HK$4 more for each bowl of noodles. The additional cost will be transferred to the customers." Wong said he would also consider cutting staffing by as much as a quarter to counter the impact on his business. He said he would have no problem with a rate of HK$23.40, as proposed by the Hong Kong Chamber of Small and Medium Business. He could also afford to pay HK$25, but is concerned such a rate could affect other businesses, causing inflation and pushing up his operating costs. "My staff costs have already increased by 25 per cent compared to two years ago. Because I found it difficult to hire staff, I needed to offer a higher rate," he said. Wong used to offer HK$20 an hour. "The government should not intervene in the market and force people out of work."