Economics 101

 The Minimum Wage:

Please don’t buy into the progressive’s minimum wage argument about fairness/compassion.  Let me make take most COMPASSIONATE position possible: there should be no minimum wage.  Period.  In a free market, workers who are talented will never sink below a fair wage. 

Only a market can determine what is fair; one Upper East Side progressive with a trust fund and a $2 million apartment is NOT one to determine fair.

Progressives sometimes do try define a fair wage.  They call it a “living wage”. 

Watch how wrongheaded the progressives are when they trumpet a living wage.  They are saying, “it takes x dollars a year to live so irrespective of skill we are going to pay you that”.  Actually, not we, but an EMPLOYER is going to pay that. 

Living wage arguments take no account of differences in the cost of living.  It costs less to live in Colebrook NH than Boston MA.    If you mandate a wage, some will be getting unfairly high pay, and some (with children and high medical expenses) will still be below a living wage. 

 And a living wage is MORE unfair when you account for an individual’s circumstances.  Take two equally talented computer programmers.  One is single with almost no debt and rides his bike to work; the other has a wife and three children, a mortgage and two cars to pay off.   The second worker needs five times as much to live as the first.  It’s certainly not fair to pay an equally talented person 1/5 of what you pay the guy sitting next to him.

Now, let’s say living wage gives way to the mild-sounding “minimum wage”.  The argument is that it gives a floor.  Floor, yes.  But that floor has trap doors.  Beneath them is ZERO wage.  And when a minimum wage is imposed, some employees are let go, and some can’t get hired in the first place.

You temporarily lift some people while you give the total shaft to others.    This is not theory.  It’s empirically true.  Walter Williams reports between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage.

More recently, Seattle imposed a high minimum wage “for” restaurant workers starting in January 2015.  In just 9 months 32 Seattle restaurants have closed.  Number of restaurant employees without jobs: 740.  Don’t blame an overall downturn though: the rest of Washington state has seen in increase in restaurants: over 5000 jobs have been added to Washington restaurants in that time!

The best way to sabotage chances for upward mobility of a youngster from a single-parent household, who resides in a violent slum and has attended poor-quality schools is to make it unprofitable for any employer to hire him. The way to accomplish that is to make an employer pay a wage that exceeds his skill level.

Imagine that a worker's skill level is such that he can only contribute $5 worth of value per hour to the employer's output, but the employer must pay him a minimum wage of $7.25 per hour, plus mandated fringes such as Social Security, unemployment compensation and health insurance. To hire such a worker is a losing economic proposition. If the employer could pay that low-skilled worker the value of his skills, he would at least have a job and a chance to upgrade his skill and earn more in the future.

There’s something even more important about a first job – it gives dignity.  That alone is worth a few hundred dollars a month.  A job also gives responsibility.  Indeed, the best social program ever created is a real job.

The free market has elements that are uncomfortable.  But the free market produces the goods and services we want, at prices that are affordable to most, and it gives everyone the opportunity to work more and thereby afford more. 

Some progressives want to smooth all discomforts.  They should have lived the old Soviet Union.  Or they could join Mr. Putin now.  I will pay $20 to deport a progressive voter. 

Some progressives want to MAKE a Soviet Union, here on our shores.  They know minimum wage legislation destroys economic freedom and destroys jobs.  It plays right into their hands of a communist order where people have to look to thug politicians rather than their own skills.

Every time the government sets a minimum wage, it is keeping someone from getting a job.  Good workers will quickly rise to command more than the current minimum wage.  Switzerland, with one of the world’s highest average wages, has NO minimum wage.   (Ditto Singapore, until 2011).  At the outset, some is better than none; apply it here.