We should not raise the minimum wage as many progressive activists across our country might suggest, but instead abolish it completely.
Let’s think about this critically…why do minimum wage laws exist? The answer of course is that they are the consequence of well meaning legislation trying to protect the most vulnerable workers in our society. Low-wage workers are guaranteed to earn at least a minimum (often called fair) wage for their work and the government enforces it. This sounds righteous in principle, but it relies on the false notion that a government should decide what is a fair wage for an individual instead of the individual themself.
If the first question is why do minimum wage laws exist a logical second question is what is the consequence of the law. As stated in a previous post, With Great Freedom Comes Great Responsibility, every action has consequences- some intended and some not.
The intended consequence of a minimum wage law is to improve the quality of life for all low-wage laborers. However, this simply does not happen and leads to far more unintended consequences instead. Artificially increasing the market price of labor leads to businesses hiring fewer laborers over time. If not leading to fewer laborers being hired, business will at least naturally seek to hire more-skilled laborers, available at the new inflated wage. Either of these options results in a fewer number of those the law intended to help being employed- in other words having the exact opposite of the intended consequence.
The intended consequence of minimum wage legislation on businesses is that the business will continue operating with the same number of minimum wage earners and simply pay them the forced higher wage. This is a truly ridiculous intended consequence. By artificially inflating the cost of labor the business is faced with few options to retain the same level of profitability.
For one they can increase revenue. This is the best chance a pro-minimum wage proponent has at winning this argument. If the increased wage incentivizes the minimum wage worker to become more productive then it would possibly lead to increased revenue for the business. This assumes that a minimum wage worker is not producing at their highest output levels at their current wage, and that they are capable of far greater output if only incentivized properly through a greater wage- if you believe that one, then I also have some free beachfront property in Malibu I would like to give you.
The second option is the business can cut costs on things other than labor like operations, overhead, research and development, etc. This is unlikely since these things directly contribute to the revenue making actions of the business. At the very least this option will force the business to restructure in order to accommodate the rising labor cost associated with employing the same number of people as before.
The third and most likely option for a business is to cut labor costs by hiring fewer workers while hoping that the first option actually works out. If the minimum wage earners they continue to employ are so inspired by the new higher wage that their productivity increases and leads to enough increased revenue to offset the increased cost then maybe the business could even rehire the old workers that they let go in order to initially cut the forced costs. However, if the business revenue is higher without them, and now it costs more to re-employ them why would they?
Illegal immigration further compounds the negative effects of an increasing minimum wage because the illegals are not bound to the governmentally inflated wage as long as they can find an employer willing to pay them off the books. This provides an out to businesses that are overly stressed by the new rising minimum wage. However, with 11 million illegals (that we know about) currently residing in the country it seems that many businesses are willing to opt for the less expensive, albeit less legal option for labor. Ironically, the same progressive crowd that is in favor of the higher minimum wage is the one that wants illegal immigrants to be allowed to remain and even thinks there should be no restrictions placed on future illegals.
So who really cares about the poorest, lowest-wage earners? The folks that are content with allowing illegal immigrants to undercut and flood the low-wage labor market in one breath, and also content to increase the minimum wage ensuring business will hire fewer legal low-wage earners in the next?
Or is it perhaps the folks like you and me, New Third Way folks, that want the government and illegal immigrants out of the labor market so that American, low-wage earners- the most vulnerable among us- can make a decision about what wage is fair for the hard work they do every day to support their families.
The bottom line is this: if you want people to have jobs there must be less interference with the labor market, not more. If someone is willing to work for a wage, why should the government tell that person they cannot? No person or business should be allowed to force a person to work for an unfair wage, and by that same logic it follows that no person should be told by their government that their personal expected wage for their work is inadequate. It should be solely up to that person, not the government, to determine what is indeed fair. Thanks for reading.