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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
Not immediately. But don’t assume each year does not introduce a new group of entry level workers who will now find jobs closed to them, just like in the past.
None of this would be a big deal if the freaking government would just let prices drop. Basically all of them. No asset inflation either.
I’m not sure that would be inflationary – it would be worse than that. It would be stagnationary. After all, once I have my 350 million bucks, then I won’t feel the need to go to work at the docks and unpack the ships’ containers with all the clothes and shoes the people now are clamoring for.
And if I don’t show up tomorrow to unpack the containers at the docks, maybe my neighbor will not go out to do carpentry framing the new home he was building. So if no one is working, how does any work get done? Who builds the homes we newly minted millionaires are clamoring for? Or delivers the clothing to the places where we order them on line?
You’d have to pay people a lot of money to tempt them to do this work. And that would make the goods and services more expensive – so that would be inflationary, right? And the 350 mil would be worth less because it would buy less. It’s only worth a lot now because everybody doesn’t have that much.
I googled around, and I found you’re right in that raising the minimum wage does reduce employment in some low skill industries (in part by increasing automation – full disclosure: I’m one of those people that will queue for the human checkout if I can, even if a self serve swipe one is available). It doesn’t decrease it in all industries – no self service janitoring (yet), for eg – but that’s a swings and roundabouts thing.
That said – there’s still the issue of the working poor – when is that an issue and why? What’s the best way to address it – if we should – if not with raising the minimum wage?
Either UBI or a more libertarian economy and financial system.
A UBI is paid out of progressive taxation. When you have a minimum wage you literally don’t know what it comes out of but it mostly is the same thing as regressive taxation, one way or another.
A higher minimum wage solves the problem of “the working poor” by turning them into the non-working poor.
No of course not. Do you seriously think everyone gets to keep their job at the higher wage? Do you seriously think having low paying jobs for young inexperienced people to get started on the ladder to success is bad?
Don’t central plan anything. The reason we are talking about the minimum wage is because we are central planning to much.
Central planning begets more central planning until everything collapses. Do you think I’m kidding but the global monetary system is going to get overhauled and it is going to be brutal. Look at all of our social problems. Why is the government running out of money? Central planning.
Clearly. America is among the richest and most prosperous countries in the world with a high standard of living. If we are broke, we must be spending too much.
The only thing the government should do is actual “public goods”. This term has a definition everybody should know. After that you could have Medicare and Social Security only if you keep them pretty much over funded except for recessions or something. That’s it. Having anybody guess at how to help the economy by forcing it around is idiocy including the Federal reserve.
Central planning is also an enormous opportunity for graft, corruption, bribery, and fraud.
Which is the real motivation.
And power over others.
Speak of the devil. This guy goes on and on about central planning and everything else we have mentioned here. Corruption and control as well. He also invokes Thomas Sowell. This is pretty granular, but this is exactly what I’m talking about.
Unfortunately, people who have been convinced that compassion and feeling is more important than basic economic principles will not stop the clamor for either a higher hourly wage or a UBI.
Many of these people are quite affluent and have always worked for some governmental agency. They never have had to make a payroll. They don’t understand that someone who pays 3 employees $ 11 an hour 40 hours a week, that employer might have to fire one person or reduce everyone’s schedule back to 32 hours a week if suddenly forced to pay each employee an extra 4 bucks an hour.
I’ve tried to explain to people who I know who are progressive that the above statements reflect reality for many employers. First of all, an $ 11 an hour wage in not really 11 bucks an hour. The employer is also covering the Social Security 3.5% or more per paycheck, the utilities the employees consumes, the supplies and of course the employees’ part of the office rent.
There is also the concept that often the employer is not making much above the employees’ pay. (And if they are, there can be qualifying situations entitling the employer to more – the time they spent getting the business off the ground, and all the monies they invested, long before any aspect of the business became profitable.)
There have been several friends I have explained all this at length. Their response is usually “I don’t care what your excuse for greed happens to be – if an employer can’t pay the minimum wage I require they pay, they don’t deserve to be in business.”