The Minimum Wage

Posted: February 26, 2014 in economics
Tags: ,

There are so many things we grow up learning in school, from our parents, from our friends that we just assume are true. We don’t even think twice about them. They are as good as gravity. One of the reasons I just can’t read enough or watch enough videos or listen to enough podcasts about this stuff is that my mind is constantly being blown. It’s like learning everything for the first time, or maybe more like unlearning so many things you thought were factual. The first time I heard the minimum wage was not good or necessary, I was a little blown away. “Of course the minimum wage is necessary,” I thought. “Otherwise employers would just pay their employees peanuts.”

I now know this is just a ridiculous notion. It comes down to basic economics: supply and demand. If you increase the cost of something people will buy less of it. Price goes up, demand goes down. This is a law, like gravity. Not debatable. The rules don’t change just because the price we’re talking about is labor. Any study claiming the contrary is nonsense. Any such study is saying gravity does not exist and that the earth is flat.

Look at my very first post, Freedom = Prosperity. This is also a law. In any situation look at the method that maximizes freedom and the result will be maximum prosperity. Allow employers to pay employees according to their productivity and more people will be employed. The other side will tell you compulsion is the path to prosperity. They are wrong, morally and empirically. This begs the question: why would anyone enact this law?

The answer is votes. Politicians know this is a hot button issue. They know they can buy votes by hiking wages so they do it. Most people don’t understand supply and demand. Or if they do, they don’t think it applies to labor. Most people think, as I once did, that absent the minimum wage law employers will just pay their workers say a dollar an hour. So lawmakers, who are no smarter than the average citizen, pander to the people who benefit from such laws (or to people who don’t have to pay the higher wages).

Here’s the truth. In a free market people will leave if their employer pays them a dollar an hour. If they stay it is because it is their best option. Employers don’t want to lose their most productive employees so they pay them enough to retain them. If employers treat their staff like sh#t they quit. They go find another job. Those a-hole employers go out of business or are less profitable because they can’t keep people. Secondly, maybe there are some jobs out there that are worth less than the federal minimum $7.25 per hour. Maybe some people want those jobs. Well sorry citizens, those jobs are illegal. Ever get angry when you want to speak to someone and you only get an automated voicemail system? Thank the minimum wage for that. Ever hear about the old days when gas station attendants filled your tank for you or cleaned your windshield? Thank the lawmakers for killing that one too. Countless jobs have been lost to the minimum wage. We are already beginning to see machines in place of cashiers at fast food restaurants. Pretty soon this will be the norm. Mark my words. So, the fast food workers you see on TV protesting for higher wages are hastening the elimination of their own jobs. Lastly, it is actually legal to employ workers and not compensate them at all. It’s called an internship. These jobs are not meant to support a family. They are meant to help build a resume, as an entree perhaps into a better job. But as soon as employers want to throw a few bucks to these interns the job becomes illegal. The government prohibits you from paying a wage at all in these cases. That sh#t ain’t right.

Similar to the unpaid internships, a cashier position at Mickey D’s is not a job that is meant to pay a mortgage or support a family of four. It’s a job for a high school kid or someone who wants to gain some experience. Its a starter job. Not all jobs are created equal, nor are they worth $7.25. If you mandate it you destroy jobs for the very people you are trying to pander to… I mean help. Morally, forcing employers to pay a certain price for anything is wrong. Remember peace, not force = prosperity.

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