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Arguing Against the Minimum Wage
The Democrat’s insane proposal to include raising the minimum wage in the most recent COVID stimulus bill has brought the Fight for $15 debate back into the national spotlight. On Monday, the Congressional Budget Office released a study on the effects of raising the minimum wage to $15 an hour.
There are many arguments against the minimum wage and few for it. The majority of arguments for the minimum wage revolve around the word should. “We should raise the minimum wage because it’s the moral thing to do”. “Businesses should pay a living wage.” “Employers that can’t afford to pay their employees shouldn’t be in business”. The problem with this is that should isn’t an argument, it’s a statement presented as an argument. It’s the conclusion without the premises.
Most of the arguments you hear against the minimum wage are focused on its negative consequences. To me, these should be reason enough to be against the minimum wage. Sadly, for many it’s not. Part of the problem is that the effects of the minimum wage fall under Frederic Bastiat’s “That Which is Seen, and That Which is Not Seen” formulation. Everybody sees the fast-food worker that got the wage increase. Stories are written about him. It’s harder to see the fringe benefits that were lost, the hours that were cut, the job that wasn’t filled, or the impact on family pocketbooks from increased prices. Nobody is writing stories about the teen that chose the streets to survive when all the entry-level jobs vanished because of a piece of paper that passed through the capitol.
As persuasive as the negative effects are against the minimum wage, they’re not the most persuasive. The strongest case is the one of freedom. It’s a simple argument: Governments do not get to arbitrarily tell property owners what they do with their property and conversely, labor what they sell their labor for. The minimum wage violates two of our most important rights: property rights and the freedom of association.
An employer’s money is their property. They use it to pay employees. Owning property means you have control over that property. Is the control unlimited? Of course not. There can be negative externalities and government has a limited role in regulating those. Ask yourself this: Are there negative externalities to voluntary wage agreements? Maybe. There can always be a bad deal. The keyword however is voluntary. The minimum wage is not voluntary. In fact, it removes “voluntary” from the equation. That’s where freedom of association comes into play. Freedom of association means we get to enter into voluntary contracts, associations, and groups. We get to choose who we associate with. If I want to do 5 hours of work for you for $5, why should that be illegal?
They say “time is money”. We have a limited amount of time in this life. The government arbitrarily dictating the price of our time is a form of slavery. If the minimum wage is $15 an hour, from $0.01 to $14.99 an hour we are no longer in control of our life, and unfortunately, finding a buyer is going to get harder.
They say raising the minimum wage is the moral thing to do, I think it’s immoral.
Published in General
I wouldn’t go that far, Charlotte. I would give up Bill Clinton’s right arm, but not yours. And actually, there are candidates who will say such a thing, just not in either of the two big parties.
Is also why big corporations are in bed with government. They can survive wage increases temporarily and the regulations. Their smaller competition can’t. Squeeze them out and corner the market. Fascism.
Bastiat has one of the best arguments against.
https://mises.org/library/which-seen-and-which-not-seen
The way they will do that is increasing use of robotics and automation, and letting go of the low end workers.
Why are the low skilled workers licking their chops over $15 an hour? They are going to be unemployed. Anywhere where jobs will remain, Biden is importing illegals to replace them.
Call it what it is, an elimination of low paying jobs law, or a law to make low paying jobs illegal. As one commenter already mentioned, the minimum wage never changes. Its always zero.
Now that we are calling it what it is, who will elimination of low paying jobs impact the most? Answer: Young inexperienced workers trying to improve their situation. Let’s not give them a chance to get ahead. Lets keep them discouraged, and on welfare. That’s compassionate.
If they are working at Amazon it is because it is the best place for them to be, given their current situation. If there was a better alternative, they would take it. So, if you outlaw their job, you can only be making their situation worse.
Due to limited time on my lunch hour, I didn’t read all the comments. Apologies if I belabor points previously brought out. There is another part of this problem—the long-time employee. I’ve worked almost 30 years at one job, and make $14.00 an hour. If this increase goes through, I’ll be training my higher paid replacement. Where is my incentive to continue to work? I’m damn glad to have this job, enjoy my work most days, and will miss it when I retire.
This is a small family business, with about 25 employees. I project it will be forced to close if the owner has to pay $15.00 an hour to everyone who hasn’t earned that. I always thought the minimum wage was intended for entry-level jobs, where one could learn and get experience, but I see I might be mistaken, with the comments I read. I guess my education was lacking? Race was never mentioned in any classes that touched on why the minimum wage was implemented.
Two of my nephews (High School and college) spent the summer working at an Amazon Warehouse. They loved it.
Wish I could have made the equivalent of $15/hour when I was their age.
Let’s not forget that the employees have a say in a fair wage discussion. Wage negotiation is not a one sided activity in a free economy. A know-nothing/no-skills worker who wants to learn might consider a $1/day job a great place to begin building knowledge and skill. Unpaid internships exist, so even less than $1/day. But as soon as the know-nothing/no-skills worker gains knowledge and skills that are worth more than $1/day, the worker can shop his knowledge and skills among different employers, and the employers compete to buy the worker’s labor. As a free person, the worker can choose for whom to work. An employer that wants better workers with more knowledge and more skill to produce a better product or service, or to operate more efficiently, has to offer something (usually more money, but could be other terms of employment) to get those better workers to work for him. The worker with that more knowledge and more skill can choose the employer with a pay program that suits the worker.
A minimum wage prevents the know-nothing/no-skills worker from getting onto the first rung of the ladder of economic success.
[There are people out there for whom even such concepts such as showing up at a particular time to begin work and staying until the end of a shift are completely unknown concepts, and so job skills have to start with learning even those basics.]
Earlier this week, the Fox cable news channel that used to feature Lou Dobbs let “Kennedy” talk about this at length. (The younger woman counterpart to Dobbs.) She is on at 8Pm eastern time.
Anyway, in Front Seat Cat’s article on Time Mag’s exposure of the Dem’s fortification of the election, I posted this:
Big business is often pro-Democrat b/c regulations increase the cost of entry for new competitors, and ups the cost of operation for already established competitors. Many big business owners loved the idea of ObamaCare for that precise reason. In that case, many big business owners wee already paying their people the added benefit of decent insurance policies as they did not want to lose their bet workers to other firms that did. But the other up side of ObamaCare is that it hit small businesses so hard, many probably went under, leaving the larger firms a more open playing field. (I had two friends who nearing retirement age and realizing that the cost of paying for the ins for two employees took a lot of the pizzazz out of their reason for operating, so they retired early.)
And with Biden making the $ 15 an hour minimum wage a priority, many big businesses are eager for that 15 buck an hour wage to occur also. The bigger businesses can afford that increase in costs. And knowing their smaller competitors will have to cut their workers’ hours back, which demoralizes the work force, and which also means things that were getting done won’t get done, has them grinning all the way to the bank.
Anyway, on the Kennedy show, it was revealed it is expected that 1.4 million jobs will be lost, across the board and across the nation, should the new minimum wage come about. Meanwhile Biden has stated that “all the studies I have learned of reveal it is a win/win proposition, and this is greatly needed to raise the tide that will lift all boats.”
You state that “There are many arguments against the minimum wage and few for it. The majority of arguments for the minimum wage revolve around the word should. “We should raise the minimum wage because it’s the moral thing to do”. “Businesses should pay a living wage.” “Employers that can’t afford to pay their employees shouldn’t be in business”. The problem with this is that should isn’t an argument, it’s a statement presented as an argument. It’s the conclusion without the premises.
I applaud you for your astute analysis. However in the world of the Demonrats, an argument needs to pay more attention to feeling than to logic. I was told three years ago that “Don’t worry about an increase in immigration numbers should we progressives turn over the Trump border prohibitions. Once the minimum wage is raised, everyone in California will be prosperous and poverty will be a thing of the past.”
I’m afraid that your argument is unpersuasive. In a capitalist system, employers are already required to maximize productivity in order to make their businesses succeed. There is no reason for government to provide extra incentives by threatening to close marginally productive businesses.
Please keep in mind that minimum wage laws don’t require anyone to do anything. They are prohibitions, not requirements. Specifically, they prohibit paying people less than the minimum wage, even if both the employer and the prospective employee would agree to a lower wage. Therefore, if the prospective employee’s ability to produce economic value is at a level below the minimum wage, the law requires that no economic value be produced at all, and that the prospective employee remain unemployed.
Minimum wage laws are almost entirely harmful, especially to the poorest people among us. Interestingly, the Scandinavian economies that are ostensibly so admired by many progressive politicians have no minimum wage laws. But that doesn’t seem to have come up in progressives’ discussion of the subject.
Several studies came out of the NYC experience where the 15 buck minimum wage became policy, and all of them revealed that within short order, automation replaced the lowest level, entry jobs.
The studies focused on the car washing industry. At first, owners of these businesses tried laying off half their work force to have the payroll to pay the others the doubled amount. But then working twice as hard was too heavy a burden on the remaining staff, so many quit to simply join their newly fired colleagues on the streets of NYC, working independently in worse conditions, and facing such problems as being robbed at the end of the day.
The car wash owners soon realized the advantages of using an all robotic work force, as the outlay for the equipment is amortized as a tax savings over the years, and it was cheaper than trying to pay people 15 bucks an hour. So soon, the 15 buck an hour car workers were unemployed on a massive level. Plus the automated equipment never has sick days, or family emergencies, so that was a consideration as well.
Wouldn’t an increase in minimum wage also increase consumption? That would be good for the economy (and jobs).
My mother-in-law just called my wife all frustrated because she is at the supermarket and there aren’t any lanes open with cashiers, only self-checkout. It seems that in anticipation of higher minimum wages businesses found ways to avoid paying those wages at all.
In the real world, there will be a loss of jobs. Read why in comment 43. (Plenty of youtube videos are still up explaining in detail how the 15 buck minimum wage in NYC ended up for most low level employees.)
No, because of all the minimum wage people who will no longer have any job at all.
How can it increase consumption when prices go up and more people are unemployed?
Isn’t creating wealth, just shuffling it around.
If jobs/businesses are eliminated, it’s destroying wealth.
As I understand it, when minimum wages increase, prices at businesses “poor” people (i.e., those who earn at or near minimum wage) patronize go up faster than prices at businesses “rich” people patronize, and may go up faster than the wage increase, so there may be little to no net increase in consumption by people earning at or near minimum wage. Prices at fast food restaurants are more affected by minimum wage increases than are prices at fine dining restaurants.
If that was true, then we should be able to raise the minimum wage to $250/hour and really supercharge the economy.
As Walter E. Williams said, it makes it illegal to hire someone whose productivity isn’t worth the minimum wage.
How do people who have had their jobs eliminated increase their consumption? The only answer I can think of is to turn to a life of crime, which is exactly where young people who can’t find work go.
Seriously, do you think everybody loses their job when minimum wage goes up?
If we could increase prosperity and distribute it better by government fiat we would’ve done it along time ago.
I’ve said this over and over, and I will say it again. This is the problem. We have done every single thing wrong in the face of globalized labor and automation. These things lower prices. This is the same thing as deflation. This is what prosperity comes from. Everything should be going down in price because that is prosperity but the government stops it because our system requires inflation. It’s going to end the hard way.
Forcing wages up by government fiat isn’t going to make the system any better or help anybody.
Exactly. Of course, why stop there? Why not simply issue every American a super lotto win of $ 350 million bucks!
However the One World Government that has been in its planning stages for 40 years needs further asset stripping of our nation by eliminating both our high paying jobs and our ability to glean our own resources: thus witness the recent ban on fracking. That ban accomplished both items with one stone.
Along with that, there needs to be the continual misinformation that requiring all businesses to pay the employees at least $ 15 an hour means two separate things: high unemployment, and automation.
Of course the coming automation will create even higher unemployment.
With the Dems in charge, Miffed White Male’s idea of a $ 250 an hour minimum wage might be the exact road the AOC followers will embark upon, as they really truly think it will work!
Sounds inflationary
Given how decent AI capabilities currently are, I would say almost everybody loses their job.
Even without a minimum wage increase, it is estimated that some quarter of a billion delivery drivers across the globe will be unemployed by 2025.
If automation did not exist, there would still be serious consequences. As seen when in NYC, the city officials insisted that car was workers be paid $ 15 an hour.
You might spend 14 minutes getting a first class education on the real world effects of raising the wages on low level entry style jobs:
https://www.youtube.com/watch?v=0fsVI3EmUnQ&t=4s