Weekly Opinion Editorial
MINIMUM WAGE
IS WRONG!
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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