Monday, April 11, 2016


Weekly Opinion Editorial
by Steve Fair
Minimum wage is defined as the lowest amount that employers can legally pay their workers per hour of labor. The first minimum wage law on record was passed in New Zealand back in 1894.  The current minimum wage in the United States is $7.25 per hour.  Eleven states have chosen to establish a higher minimum wage than the federal mandate- the highest being Washington D.C. at $10.50 per hour.  Most who support a minimum wage believe it will insure that people are paid properly for their work.  Here are some simple economic principles on minimum wage:
     First, companies do not pay the wages of their employees, consumers do.  When the minimum wage is increased, that is simply passed onto the consumer in the form of a price increase.  No company can ‘absorb’ an increase and survive.  They take price increases.  When the minimum wage increases, you pay more for food, gas, and every other good or service.
     Second, the minimum wage law rewards the less productive.  If the government requires a company to pay a ‘minimum wage’ to their employees, it means the more productive gets paid the same as the less productive.  The fact is that one size doesn’t fit all.  Some people are worth half of the minimum wage and others 50% more than minimum wage, but when an employer is mandated to pay both the same, the more productive employee is shortchanged.  Hard workers should hate minimum wage, because slackers embrace it. 
     Third, minimum wage increases usually result in job losses.  Every time the minimum wage is increased, companies adjust their workforce and normally lay off some workers.  Most of the workers impacted are students going to school or entry level employees.  Younger and less educated are the workers who usually are earning minimum wage.   Raising the minimum wage hurts the very people advocates claim it is supposed to help.  Some economists estimate that over 1 million jobs will be lost if the federal minimum wage is increased.
     Fourth, there is absolutely no evidence raising the minimum wage will reduce poverty.  As stated earlier, companies simply pass on the increases and consumers pay the higher wages.  If prices for goods and services increase, then the higher prices must be paid for by the person earning the higher minimum wage. 
     Fifth, raising the minimum wage does not increase productivity.  Getting employees to produce at a higher level is increased productivity.  Minimum wage doesn’t do that.  It simply artificially inflates the cost of goods and services.  When an employee is given a wage increase, it should be based on merit, not because the government says you are worth so much per hour. 
     Politicians love to raise the minimum wage because it’s a great vote getting mechanism.  If you tell people you will raise their wages, they will vote for you.  The government loves an increase because they get more money if the minimum wage is increased. 
     The two major political parties have two very differing positions on minimum wage.  The Democrats have made raising the federal minimum wage to $15 per hour a plank in their 2016 platform.  Republicans are against an increase, to the point that they House unanimously voted down the proposed increase. Most economists generally agree that a large minimum wage increase will damage the economy.  Republicans believe that wages should be based on skill, education, and the law of supply and demand.
     Raising the minimum wage is immoral.  It involves asking a productive hard worker to pay more for goods and services so someone who isn’t as productive can make a higher wage.  It is wealth distribution and is not consistent with a free market society.

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