Facts and figures can be thrown around in debates back and forth with often biased data to support either side. Instead of getting into another one of these arguments, I’d like to take the conflict back to a sound center. The fundamental argument about the minimum wage, at a very basic level. Stripping everything away to the core can be a simple way to decide what is right and wrong, what works, and what doesn’t.
There was no U.S. minimum wage at all until the eve of World War II. States had tried to institute minimum wages, but the United States Supreme Court repeatedly struck down those state laws. The Supreme Court’s reasoning was that a minimum wage deprived workers of the right to set the price of their own labor.
Let’s look at what we have as far as legislation goes today in the workplace. $7.25 is the federal minimum price of labor, with certain states and cities choosing to raise it higher. This is an arbitrary number. As is $9, or $11, or $15. What is deciding these wages? Who is deciding these wages?
We know the government dictates the wage, with the support of lobbyists who propose and push for certain numbers. But that still leaves the question of how they choose it.
“In reality, there has never really been an established formula for determining the federal minimum wage. Some sources believe that it is calculated as a certain percentage of the current poverty line for a family of four, but in recent years that has not proven to be the case. Currently, it is not indexed to the rate of inflation, either. There have been efforts to tie the minimum wage to the annual inflation rate, but those proposals have not been adopted. In fact, the most recent raise, adopted by Congress in 2007, does not even match the actual spending power of the 1979 adjustment.” –wiseGEEK
Essentially, the numbers are pulled out of somebody’s ass to win votes. It sounds really good for everyone to make $15 dollars an hour. It sounds really good for them to make $30 an hour as well. I’d love it.
The “minimum wage” is simply but unhelpfully worded. I don’t like it. Millions of Americans are now striving for “the minimum”. Giving a name to a wage that we want to earn is harmful, in my opinion. The fact that we say “you should be able to support yourself on the minimum wage” creates this mindset that the minimum is enough. It should never, ever ever ever ever ever be enough. It means that no matter what, no matter how poorly you may be performing at your job, the government will always be there to take care of you. Further, the federal or state decision of a minimum wage discourages employers to treat workers as individuals. It’s easy to put them on “the minimum wage”– instead of making a deal with each employee with a wage that works for both of them. I believe it encourages low wages.
We always hear about the need to create jobs. The president speaks about it often, and reports are out each month totaling jobs created and lost. It is important to note, as learning work ethic and the value of a dollar are two of the most important things a job offers you, which is what people mean when they say “getting skills”. Unskilled workers don’t just learn how to flip burgers at fast food joints, they learn how to show up on time, stay on task, work with others, customer service, and how to deal with conflict. You learn how to earn your money. So basically, work is important, and everyone needs to be doing it. This applies here with the minimum wage:
“In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.” –Murray Rothbard
A few days ago I wrote Why Pharrell is Happy, on why earned success is so important. The minimum wage works just the same way as welfare– giving unearned success. How would it make you feel to have your employer be forced to reward you? Now, not saying that nobody currently on the minimum wage is worth more, but there’s a hefty chunk that aren’t. I’ve seen them– and there’s another chunk that are so obviously worth less. Not the employee personally, but the value of their labor.
Once the minimum seems too low, employees ask the government rather than their employers to raise their wage. Maybe this is because their employer won’t give them a raise. But why not?
Someone I know was recently unhappy with her low paying fast food job, and decided to quit because of an overload of hours each week, and obviously the work was not worth to her what she was being paid. On her last day, her boss decided to make a deal– he’d cut her hours down reasonably, and even give a raise. She took the deal. Notice how this all happened, in a nice step by step format for all you skimmers:
1) Employee decides she is worth more than current wage
2) Employer is faced with the choice of having an important asset gone, or meeting the demands of the employee
3) Employer realizes employee’s worth to his business and raises pay
This only works if the employee is worth more than the current wage. Otherwise, the boss would likely say suck it up, or get out. Is this a bad thing?
No way. Why would we eliminate competition and the desire to be a better employee in the workplace? There is a reason I work really hard at my job. I want to prove myself worthy to my boss as better than my coworkers in hopes of him recognizing my effort and rewarding me. That both encourages productivity and a natural increase in my wage. There is also only so much to improve on at an entry level job. There is a reason why they don’t pay as much as many other kinds of employment. Even if you work hard at it, unless you move up to management or corporate, there isn’t much else you can do to increase the value of your labor past a certain point. These jobs aren’t meant to be held forever, or satisfied with in the long term. That would be absurd if we were encouraging living on a McDonald’s wage. Oh wait… we are. There is certainly an over dependence on college degrees today, though as they become more meaningless I believe higher education will grow more and more useless. Opportunity exists. We want to celebrate how many people get the hell off the minimum wage and move on to other levels of employment.
There are those employers that do not raise wages no matter what– no matter how hard you work, you still get paid a bum wage. This is where the government intervenes.
They come in and say “Woah, woah– hey now. Can’t you see that Alice is working very hard? Why are you not rewarding her? You know what, no. You have to reward her.” And grants a minimum wage increase. Sounds good, no? Sounds like a protection from bad employers.
However, this isn’t a natural decision as it would be decided by the market. Prices for everything else we consume are created by supply and demand, and the balance created by the two is perfect. When competition is present and nobody has the power to influence or set price, the market (producers and consumers) determines the price of a product, and the price determines what is produced, and who can afford to consume it.
So, we know that intervention hurts economically when prices are set by external factors. It screws with this balance that cannot be forced. You cannot mess with the equilibrium of supply and demand for products, so why should we believe an arbitrary number forced upon businesses is going to be beneficial?
Because “Americans deserve better”. Do they? How do we know, in each individual case?
We don’t. Which is why it should be up to the employer to decide who is worth what. Wages should be decided based on what the employee is willing to work for, and what their labor is worth to the employer. Nobody will work for $2 an hour if they have to support themselves. Companies need employees just as much as the employees need jobs. The struggle at a low paying job should be incentive to work hard, increase the worth of your labor and demand to sell yourself for a price you are satisfied with. Most entry level workers are past minimum already. We can’t be happy with an arbitrary number that decides our worth, and we can’t afford to sell ourselves short.