October 22, 2020

Gen Z Conservative

The thoughts of a young conservative on political issues relevant to all ages

the minimum wage debate

The Minimum Wage Debate

My Take on the Minimum Wage Debate:

The minimum wage debate is a contentious topic in America. On one side, people think the mere idea of a minimum wage is abhorrent. I tend to agree with them. On the other side, people say that not only is the minimum wage a human right, but also that it needs to be higher. That socialist viewpoint has spawned the 15 dollar minimum wage debate. Or, in some areas it has even led to a higher minimum wage debate as socialist politicians push for 20 dollar an hour minimum wages. In my opinion, that is ridiculous.

In this article, I will examine both why the minimum wage is a bad idea, and why raising the minimum wage is a bad idea for a number of reasons.

Why the Minimum Wage is a Bad Idea:

I firmly believe that the minimum wage is a bad idea. It limits entry level positions, goes against the freedom of contract, and limits the ability of workers to have flexible hours.

The Minimum Wage Limits Entry Level Jobs:

Minimum wage, entry level jobs are growing increasingly rare. Even in a strong economy, there don’t seem to be enough of them. I think that is mainly because of the minimum wage.

If employers need to find someone to do menial tasks, they want to be able to pay what that labor is actually worth. And they want to find someone who is willing to do it for that limited amount. Before the minimum wage was implemented, they could easily do so. Students looking for work to have some cash could find low-paying, but easy, jobs to do after school. While they didn’t get paid much, it was enough to make the job at hand worthwhile and gave them valuable experience. Through those low-paying, entry level jobs they learned about hard work, the joy of getting paid for honest work, and how to perform well in a job. Also, they could use that money to learn the importance of saving and investing, like I talk about in my “The Importance of Investing” post. Additionally, employers, especially small business owners, liked that situation because they could hire local kids and find low cost ways to get the job done. Although not perfect, it was an excellent situation.

Then came the federal government and minimum wage laws. Soon enough, those starter jobs for students all but disappeared. The students’ labor wasn’t (and still isn’t) usually worth minimum wage, so employers started having to look elsewhere. They rolled ever more duties onto the entry level jobs, thus making the jobs really entry level. Now experience matters. But without entry jobs, it is hard for kids to get work experience. A great system was destroyed by the minimum wage. Many jobs for which workers receive the minimum wage are now no longer entry level jobs. They’re a bit more difficult, but not difficult enough to garner a higher wage. It is a strange and hard to explain situation because it isn’t natural. When freedom of contract was still held paramount, however, the situation was natural.

Minimum Wage Laws limit Freedom of Contract:

The original idea for minimum wage laws came about during the Gilded Age. As The Republic for which it Stands, “The Best Book about the Gilded Age,” talks about. Employers, especially store and factory owners, were outraged at the mere idea of it. Now, the government was infringing on their natural right to come to an agreement for wages. Yes, some employers paid to little for the work they demanded. But the employees weren’t slaves; they could leave and find a better job at any time. That free system is what allowed capitalism to thrive. While there are occasionally periods where work and wages don’t align, those are gradually smoothed out by the invisible hand of capitalism. Capitalism saves us from imbalances in the market. But, that only works if we let it act without government interference, as I discussed in my “Capitalism will Save Us” post.

Good work will lead to good wages as long as men are free. If employers can choose what to pay their employees, they have a better way of making sure the best workers get paid the best wages. However, if those employees all have to be paid at least minimum wage, then the good work of the better employees will have to subsidize the less effective employees. Or, fewer people will be hired. Neither situation is ideal.

Proponents of the minimum wage claim that it is the only way employers will pay a “just” wage. I find that ridiculous. A just wage is a wage agreed upon through freedom of contract. When the wage is forced on both employee and employer, it is the opposite of just. Then it is just socialist, government intervention in the economy. It makes both groups less free, demeans the worker through its paternalistic nature, and oppresses the employer by limiting what they can do. Personally, I find that unjust.

Minimum wage destroys the idea of freedom of contract. Because it destroys freedom of contract, it limits options for both employees and employers. That is just one of the reasons that the minimum wage is a bad idea.

Minimum Wage Limits Flexibility of Hours:

Without a minimum wage, employers are more likely to give their workers flexible hours. If an employer knows he is paying only what the work performed is worth, rather than a subsidized, higher wage, then it is more likely that he or she will let the worker have some flexibility with their hours. That is the natural give and take inherent in a pure freedom of contract scenario. If, however, the employer must pay more than the employee is worth because of the minimum wage, he or she is much less likely to be flexible.

Once an employer has to pay a worker the minimum wage, he or she will focus on trying to get the amount of work necessary out of the worker to justify that artificially high wage. However, because of the nature of the work present in entry level minimum wage jobs, it is unlikely that the work will justify the salary. That means the employer has much less room for error; if the employees aren’t working at a specific time, then the monetary loss could be even worse. That’s yet another reason why the minimum wage is a bad idea.

Why Raising the Minimum Wage is a Bad Idea for a Number of Reasons:

Like I have just stated, I think that the minimum wage is a bad idea. Especially because of how it limits freedom in a number of ways. Yet, current socialist politicians somehow seem to always be able to come up with worse ideas than their previous ones. That worse idea is the 15 dollar an hour minimum wage. I simply can’t comprehend how the minimum wage debate has progressed from the merits of a minimum wage at all to suddenly doubling it to $15 an hour. That amount is ridiculous, making the minimum wage debate even more infuriating. The minimum wage debate is now even more exasperating and again, infuriating, because no entry level position justifies $15 an hour. Especially not the jobs where a $15 an hour minimum wage would really be applied.

No Entry Level Position Justifies $15 an Hour:

Places like McDonald’s, Walmart, and many small businesses are successful because they can offer goods at a low cost. One of the ways they do that is through adding as many entry level positions as possible. Additionally, they are supply chain, innovation, and organization masters. They know how to get the right goods to the right place at the right time for a low-cost. But that is irrelevant to this discussion of the minimum wage debate, and especially the $15 an hour minimum wage debate.

What is relevant is that those types of stores are able to operate mainly because of access to cheap labor. Without cheap labor, they can’t succeed. Bernie Sanders, the socialist politician, recently spoke at a Walmart shareholders meeting in which he demanded pay raises for the workers. How can he justify that? Should a greeter really receive $15 an hour? No, of course not. That job should be, as it used to be, extremely low paying. The labor does not justify $15 an hour.

Entry level positions are meant to be held by those that need a bit of cash and some work experience. High-schoolers should be the ones flipping burgers or working the register. And not for $15 an hour. Those jobs were meant for that level of employee, and forcing employers to pay them too much throws the whole system out of balance. It hurts profits, thus hurting shareholders (which could limit where that high schooler goes to college, since free college is still recognized as a bad idea.) And, it hurts employees, because their employers will continue to demand more of them that is outside their skill set. If the labor market were free, $15 an hour should buy high quality labor. But, since it isn’t, $15 an hour will only pay for an entry level position. That means those positions will require more work and experience, thus limiting opportunities for those seeking their first job. Limiting freedom of contract and making the labor market unfree hurts everyone.

Conclusion:

Hopefully, after reading this article on the minimum wage debate you understand why the minimum wage is a bad idea. It limits freedom. It cuts down on the number of jobs available. Additionally, it dramatically increases labor expenses, which is a problem that shouldn’t be forgotten. Those expenses lead to a drop in innovation, capital expansion spending, and profits. All of those drops have significant negative effects on the economy and go directly against “The Magic Formula of Economic Success.”

Finally, I think this will be described in a later post, but minimum wage jobs aren’t meant to be careers. Critics on the left often say that the minimum wage isn’t a “living wage” for a family. Of course it isn’t. The jobs that pay minimum wage are meant for 16 year olds, not 40 year olds with two kids and a spouse. Those people should have developed their careers so that they can earn an unforced “living wage.” If they haven’t, employers and consumers shouldn’t have to subsidize their unearned wage. That is unjust and goes directly against all American understandings of the free market.

I hope you enjoyed this minimum wage political cartoon and now have a better understanding of the minimum wage debate!

By: Gen Z Conservative

Links:

The Magic Formula of Economic Success: https://genzconservative.com/the-magic-formula-of-economic-success/

Bernie Sanders Walmart minimum wage protest: https://www.npr.org/2019/06/05/729735727/from-amazon-to-walmart-2020-candidates-take-on-big-corporations-by-name

Capitalism will save us: https://genzconservative.com/capitalism-will-save-us/

The importance of saving and investing: https://genzconservative.com/the-importance-of-investing/

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