Minimum Wage vs. Moral Wage


As we wrap up the first month of 2017, I feel we need to discuss one of the large (yet less talked about) changes that happened at the beginning of the year: nineteen states increased their minimum wage.  Many of these states are on a trajectory to increase this wage each year for the next five to seven years, ultimately ending up at $15 per hour.  California, for example, began this year at $10.50 per hour and will end up at $15.00 per hour on January 1, 2022.

In today’s environment, the minute someone begins to question the idea of a minimum wage, they’re immediately labeled “an elitist monster who has no idea what it’s like to live in poverty.”  I believe it’s true to there’s an immoral element to the minimum wage…but not in the way that’s often argued.  While many on the Left consider the current level of the minimum wage to be disgraceful, I believe it’s the overall idea of a minimum wage that does the greatest harm to those who need it most.

There’s a few articles across the web (Ben Crenshaw, Forbes, and the Mises Instititute) that do a much more eloquent job of explaining the critical points of this argument, but before you dismiss all of these sources as emanating from “bastions of capitalist propaganda”, hear me out on a few points.

  1. What about the worker that didn’t get hired?  Each time the minimum wage is debated, people on the Left immediately go to the worker who needs to be paid more in order to support themselves, their family, and enjoy a certain level of lifestyle.  While we can debate whether increasing the minimum wage will actually accomplish all these things, we’re forgetting to talk about someone very important — the person who now won’t be hired because the employer can’t afford to bring on another employee.  The minimum wage is constantly cast in a helping light…yet it unquestioningly denies entry-level, on-the-job training for new workers when they can’t be hired by employers who have had cost increases thrust upon them in the form of higher minimum wages.  All you’ve essentially done is widen the gap between the “haves” (the group of people that is currently employed and will remain so through these wage increases) and the “have nots” (those who might otherwise be entering the workforce at entry-level jobs but simply don’t yet have skills worth $15 an hour).  Isn’t it the Left that’s always pitting these two groups against each other?  Now, however, they’re distinctly creating both groups by artificially widening the gap through minimum wage laws.
  2. What about a contract between two people when they both agree that they’ll be better off than they were?  To continue a point from above, let’s not forget about the worker who, for a myriad of possible reasons, only wants to work a couple of hours a day and is willing do so for $6 and hour since the task requires no experience.  Both this potential employee obviously knows they’ll be paid $6 per hour (it’s not like it’ll come as a shock to them after a few weeks on the job) and the employer believes this wage is fair, given that the work could be done by nearly anyone.  All of this sounds good — except the minimum wage laws have made it illegal for these two people to enter into this contract.  Sure, they could set up the arrangement under the table and off the books…which is likely going to start happening in ever-increasing numbers as the minimum wage continues to ratchet upwards.  But the point here is that two people, both of whom agree that they’d like to enter this work arrangement, simply can’t.  And all of this is thanks to the immeasurable wisdom of the Left.

The key takeaway from the above examples is this: there’s always multiple parties affected when laws like this get enacted.  We’re often fed stories and pictures that support a specific narrative to paint a predetermined group in a favorable light, but it’s naive to think that there aren’t secondary and tertiary affects that are negatively impacting other lives.  Each year, as the minimum wage continues to creep upward, don’t simply think about the increasing pay to the employees that are still working.  Think about the workers that will never get invited in for an interview or the business owner who can’t pay a willing college student to man a cash register because it’s not worth $15 to do so.

But don’t worry — you’ll still get to pay more for goods and services, so you come out a winner!…right?

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