Minimum Wage Madness
Here in Minnesota, at the behest of our looney-tunes Democrat Governor Mark Dayton, the Democrat controlled House and Senate is considering once again the insane idea of raising the state minimum wage. Now, the very fact that something as destructive as a government imposed minimum price for unskilled labor even exists is a testament to the economic illiteracy of much of the American public. That an even higher minimum wage bill has a chance of passing in the middle of a sluggish economy simply underscores the stupidity.
After all, anyone with an ounce of common sense understands that forcing a business to pay more for labor than the labor is worth is going to end up hurting the very people it is supposed to be helping – poor, low skilled workers. Because the only reason that anyone is working for minimum wage is that they don’t have the skills or talents that are worth any more to a business. If you have so few skills that you are only worth $5 an hour to an enterprise, then if Monday morning that business is required to pay you $7 an hour, or $10 an hour (as Dayton and the Democrats are proposing), then they have no choice but to let you go.
Which is what invariably happens every single time the minimum wage is increased. And the higher the increase, the more people who are put out of work. Liberals seem to forget that no business can be forced to keep anyone on the payroll (although I’m sure there are liberals who wish it were possible to do just that). Heck, in the most basic example, if the minimum wage were applied to the kid you hire to mow your lawn, as the cost rises you will eventually get to the point where you tell him “no thanks” and just do it yourself.
The easiest way to understand this is to imagine raising the minimum wage to say, $25 an hour. What do you think will happen? Of course, massive layoffs would ensue. The only difference between an increase of such a magnitude and “minor increases” in the minimum wage is the speed with which layoffs will occur. And when the effect is gradual, no one notices right away.
Remember when someone pumped your gas and cleaned your windows? Why do you think those jobs no longer exist? Simple – increases in the minimum wage made them too expensive for the low-skilled service they provided. However, the mechanic, whose skills are much higher, still has his job – because he contributes more to the profitability of the business, and receives substantially higher pay as a result.
What anyone is willing to pay you is based on two factors, the level of skills or talents that you have to offer, and the number of other people in the job market with the same skills. Obviously, very highly skilled workers (CPAs, heart surgeons, IT professionals, etc.) possess desirable skills AND they are in short supply, therefore they get bigger paychecks – much bigger. But unskilled workers have minimal skills which are of considerably less value to an organization, and there are plenty of them – thus the minimal wages they can command.
Naturally, liberals ignore these realities and instead focus on emotional appeals – “how can anyone earn a living on (X) dollars an hour?” Well, I hate to break the news to them, but it’s not some business’s responsibility to provide you with a certain standard of living. If you aren’t earning enough to live on, it is YOUR responsibility to gain skills, learn a trade, or educate yourself in order to make YOURSELF valuable enough to a potential employer that they are willing to pay you more.
No one owes you a job. And no one owes you any particular wage. No one starts a business for the purpose of hiring anyone. In fact, if a business could be run with zero employees (other than the owner) it would be ideal. The only reason that someone hires you is that they believe that you can contribute to the profitability of the enterprise, either by increasing revenues or reducing costs. The greater your contribution – your productivity – the higher your pay.
So why the obsession with the minimum wage? Two reasons. First, it sounds “nice” – never mind the terrible affect is actually has. People who don’t understand economics fall for it. And liberals support it not because it helps the poor (it does the opposite) but because it makes them feel “compassionate” and “caring” – while, as usual, using other people’s money to do so.
But the second, and more cynical and politically motivated reason, is that many union contracts are tied to the minimum wage – when it goes up, THEIR wages go up. Democrats are simply buying votes from unions. But the result is that raising the minimum wage not only puts the poorest, and lowest skilled workers in the unemployment line, it ends up artificially pushing up ALL labor costs, causing inflation in every area of the economy.
Ironically, who is it that is affected most dramatically by rising prices? The very “poor” that Democrats and liberals pretend they are helping. Yet, every time the issue comes up, legions of sheep go along with the madness.