Why There Shouldn't Be a Minimum Wage
by Ethan Glover, Tue, Dec 30, 2014 - (Edited) Wed, Dec 31, 2014
In 2015, this week, 21 states will be raising the minimum wage. New wages will range from $8 to $9.15 as compared to the federal minimum of $7.25. This made me wonder where the movement for $15/hr went, I haven’t heard from them in a while.
Turns out, Seattle implemented a $15 minimum wage early this year. What were the effects?
- Managers started to take on more responsibility as opposed to hiring.
- Large companies laid off employees and canceled plans to hire.
- Small businesses are moving or closing.
- Many products added “living-wage surcharges,” including parking.
- Companies cut employee benefits and overtime.
On the positive side, despite no one hiring, there has been a huge increase in job applications.
The Real Cost of Minimum Wage
The argument against minimum wage is simple. It might not be profitable for a company to hire someone at a higher wage, so they don’t hire. If someone can’t produce $7.25/hr, you’re condemning him or her to a wage of $0.
One argument says that the minimum wage raises the standard of living for all. Lowering it would hurt everyone.
This is ridiculous considering that most jobs pay above the minimum due to competition and profits. Lowering the minimum does nothing but lower the barrier to entry.
Minimum wage isn’t for adults looking for a particular “standard of living.” Jobs like food preparation and retail floor sales isn’t the kind of thing you should be doing as a middle-aged parent.
Those jobs are for young people who need to earn experience and learn skills. Minimum wage jobs need little to no skill and operate in a low risk environment. (Missing a day of work at McDonald’s isn’t going to hurt anyone.)
This also answers the argument that claims with low wages, companies will hire low skilled teenagers. In turn, those teenagers will take work away from adults who need the money.
Those teenagers need a place to develop skills and have no other options. An adult with years of experience should have more options than McDonalds.
If the claim here is teenagers are stealing jobs from middle-aged adults, I would point out that the opposite is the reality.
A third argument says higher wages will just come out of the “extravagant profits” of corporations. Higher wages will then go back into the pockets of normal people. Companies like Wal-Mart, for example, has done well to absorb every minimum wage raise imposed on it.
Yet, 60% of companies in Seattle plan to pass costs to the customer because they cannot afford otherwise. Not every company runs massive profits, in fact, most don’t.
This also means, leftists, that large corporations can disproportionally handle wage requirement increases. This gives them even more advantage over small businesses and more opportunity to squeeze them out of the market.
Who Really Gets the Minimum Wage?
Research published by economists Joseph Serbia and Richard Burkhause in 2010 shows a raise in minimum wage only benefits 11.3% of people who live in poor households.
Most people in poverty don’t work and thus minimum wage policy doesn’t affect them. Workers currently on the minimum wage are usually not primary earners. They are kids or elderly dependent on another.
Of all people who earn an hourly wage, 20% of them are under 25 but only half of those people earn minimum wage. It’s not as if people getting low wages is an epidemic. In fact, the bigger problem is unemployment and higher minimum wages can only make that worse.
Yet, the issue is an easy target for reelection campaigns in both parties. Minimum wage may disproportionally effect the young and under-skilled, but as long as it looks good on paper, it’ll earn votes.
Get Rid of the Minimum Wage
There will never be any law that gets rid of poverty, but there are plenty of laws that make it worse. We’ve seen that the minimum wage doesn’t affect most in poverty.
We’ve seen that increasing it only takes jobs away from those who have no other options. It gives more opportunity to those who least need help getting experience.
Getting rid of the minimum wage altogether gives responsibility back to adults to take charge of their own lives. If I want to work for less than $7.25, I should be able to make that decision. If I want to look for something that gives more, I had better be sure I can handle the job and produce at minimum what I’m paid.
With no minimum, we can allow those who are so outside of the market, so deep in poverty and out of the system, a way back in. It allows those we cannot trust, such as the homeless, a way to prove themselves with little to no risk.
It also means more room for more jobs. Yes, it means people at McDonald’s might earn less and get crowded in the kitchens. That doesn’t imply everyone’s wages will drop. It just means greater opportunity to get your foot in the door.
- The minimum wage cuts out anybody who can’t produce more than that wage and forces them to earn $0.
- Low wage jobs aren’t supposed to meet a standard of living, they’re supposed to introduce young people to work.
- Most companies can’t afford minimum wage increases. It helps large corporations out-compete small businesses.
- Wage isn’t an issue with poverty, unemployment is a much bigger problem, and minimum wage makes it worse.