Freedomain Radio

Let’s all protest for a raise in the minimum wage….No, thank you.

By David Kopp

            Rick Thorpe says he believes in the invisible hand of the market.  Sure he does, when it suits his needs.  It always strikes me as funny when a politician talks about the benevolent invisible hand of the market.  I also believe in the invisible hand of the market, so much, in fact, I find it difficult to see the use in politicians at all.  Perhaps Mr.Thorpe shares my sentiment.   He feels that wage discussions should take place between an employee and the employer.  This sounds great to me.  But if this is so, why have a minimum wage at all?  Obviously anyone making more than the minimum wage is paid according to laws of supply and demand.  It seems silly to let everyone who makes above the magic minimum wage number subject to the whims of the free market. 

          Maybe there should be a minimum wage for every profession.  Or, even better, lets make the minimum wage a million dollars. That way we would all be millionaires!  Or does it sound ridiculous?  Well, it is really just economics of scale.  A principle can’t suddenly change when the numbers are increased or it is not a principle. So a million dollar minimum wage is just a silly as a ten dollar minimum wage.  All it does is make it illegal to pay less than an arbitrary amount.  It does not guarantee everyone making less than that amount a raise, it just makes it more difficult to run a small business and hire employees at the entry level. It also makes getting an entry level job more difficult. Minimum wage law is just another way of saying compulsory unemployment. The law says it is now illegal, and therefore criminal, to pay anyone less than the minimum wage.  If you were an employer with five employees working at minimum wage and you were forced to raise wages by twenty percent, the first thing you would have to do is cut back on hours or fire one of your employees. Minimum wage laws don’t create jobs; they only outlaw a large number voluntary wage contracts.  Is this helping the working poor?  It also makes automation of these jobs more desirable as well.  When minimum wage is instituted the amount of money employers are willing to spend to automate their companies is artificially increased, thus further decreasing the demand for entry level employees. 

            Minimum wage does not exist to help the poor.  It helps the government.  It maintains unemployment numbers at just the right level to create more government make-work programs.  It also creates the appearance of compassion.  At first glance it may look like the government actually cares about the poor.  It doesn’t. The minimum wage causes unemployment because it prices unskilled workers out of the market. The government relies on this expanding dependant underclass to maintain and justify their existence.  This is not compassion at all.  Inevitably, this also increases the prevalence of bribes from groups who need to bypass these laws in order to function now require “special permission” from the government.  “Special permission” is never free.

            Minimum wage is not a request. It is a law enforced like any other. But should it be illegal to pay anyone less than ten dollars per hour? Or, more importantly, would you be willing to put someone in jail if they were paying someone $9.90 per hour to sweep the floor of a shop?  Both parties enter the agreement freely.  No one is being forced in this situation.  Force is only being applied when this becomes a crime.  But who is being hurt in this situation?  Would you support putting the employer in prison for his offence? Would you support shooting him if he refused to go? That is the question. That is always the question.

it seems you have got 'the wrong' meaning of economies of scale...people usually mean by this something along the lines of: when a company buys say 100lbs of tomatoes for 100somethings, and for one lb it would cost 2somethings, then the company has made a saving due to the volume of its business and this is an economy of scale. Walmart for example would benefit from economies of scale for example that your local corner shop would not. whereas walmart buys millions of everything and so can broker some kind of discount (maybe 50% compared to your corner shop's 30% discount on end store price). economies of scale thus explain why large firms can afford to charge lower prices. 

ps: i like the ending, it is abrupt and this suits the topic perfectly. it does come down to that. and it does always come down to that.

peace.