Minimum Wage

It is repeatedly pointed out that the minimum wage costs jobs.  It takes away the ‘starter’ job and makes it harder for the inexperienced to gain experience.  Instead of have the opportunity to ‘learn on the job’, they must now come to that job with more skills.

Here’s a good cartoon of what happens:

Political Cartoons by Lisa Benson

Even though Democrats are adamant that raising the minimum wage will not cost jobs, it just doesn’t make sense.

What makes sense is that some employers may able to cover the added cost of a higher minimum wage with a small price increase.  It all depends upon their competitive position and the demand for their product.  But if they are able to raise their prices and it is driven by a higher minimum wage, that cost increase just becomes another tax.  A hidden tax on consumers.  In other words it is simply more ‘redistribution’ of wealth, taking it from those who have earned it and giving it to those who don’t have the skills to earn it for themselves.

The minimum wage is popular.  It sounds great.  But as with anything that sounds too good to be true, it isn’t good at all.

There is no ‘free lunch’.  The only real way to increase a person’s living standard is by making them more productive.  Raising the cost of their labor does not increase their productivity.  Only increased skill and knowledge will increase their productivity.   Increasing the cost of their labor only drives automation or transfer of that work outside of the U.S. to lower labor cost regions of the world.

And thank goodness businesses do automate or shift work.  If they didn’t we couldn’t afford the goods and services created with the high cost labor.

Everyone should have the opportunity to improve their skills and knowledge but not everyone has the ‘right’ to more wages.  They must earn those wages.  It’s time America realized this and quit trying to ‘mandate’ higher labor costs.

All that raising the cost of labor does is keep unemployment high, force automation and/or relocation of jobs.  This drives up the cost of government and slows economic growth.  It’s so stupid.  The higher minimum wage simply adds to inflation, thus making the new minimum inadequate.  Our super intelligent lawmakers then increase the minimum wage and the cycle starts all over again.  Unfortunately, each cycle there is an increasing number of our youth left unemployed.  What are they to do?  Join gangs or do drugs?  What else is there for them to do?

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