Listen To You Tell Me Texas Friday 5/29/15
Here we go again with minimum wage. In places like Chicago, Seattle, San Francisco and Los Angeles, where liberals have absolute control over every aspect of government, laws are being passed that raise the local minimum wage to near twice or more the federal minimum wage, which stands now at $7.25 per hour.
The economic illiteracy is simply shocking.
These same liberals are fond of castigating businesses for raising prices – which they say makes essential goods and services unaffordable. But they have no problem passing laws that make labor unaffordable. The burdens attendant to such laws fall disproportionately on small, independently-owned businesses. As with any other cost, business owners make economic determinations as to whether or not the cost is worth it. With each increase, that determination is more likely to be, ‘no.’
Minimum wage laws are completely unnecessary. The market for labor will set wages much more efficiently and with much better results than a bunch of posturing liberal politicians.
Right now, according to a conversation I had recently with a local manufacturer, welders are in critically short supply. As a result, no law is necessary for this business owner to raise his wage offering. He knows that if he offers too little, he will lose in the marketplace competition for scarce employees.
Are welders worth more per hour than fast food employees? Evidently so.
Are fast food employees worth more per hour than what they are being paid? Evidently not. Because if they were, fast food restaurant owners would be in the same position as my acquaintance who can’t find welders.
The actual minimum wage is zero. It is, in fact, the default wage. That’s because every business seeks to have as few employees as possible. Only when it’s worth more to have an employee than to not have one does someone get hired. Set an arbitrary price for that employee’s work – one that is higher than what the work is worth to the employer – and the employer goes to the default rate. Zero.
A recent opinion piece in the New York Times advanced the idiotic idea that raising the minimum wage would help businesses by reducing employee turnover. Let’s take that assertion at face value. If it’s true, then once again, no minimum wage law is necessary. If employers can make more money by raising wages, they’ll do so on their own. It will not require the intervention of liberal politicians.
Jobs that are worth more than minimum wage pay more than minimum wage. Jobs that are worth less than minimum wage go unfilled.
Upon whom does this market fact fall most profoundly? Those trying to get a foothold on the lowest rungs of the employment ladder – the young, the inexperienced and disproportionately, minorities. In other words, the very people minimum wage laws are supposed to help.
Minimum wage laws were passed in the 1930s as a sop to unions. They continue to do enormous harm nearly 100 years later.