With the economy weakening and unemployment high many of our leaders, and citizens as well, are scrambling around coming up with ideas to help solve the problem. Will it be another round of stimulus spending? A round of bail outs? Should we pass laws to tax the rich more?
I got a simple idea. How about we get rid of Minimum Wage…
“WHAT!?” You might be thinking to yourself, “How can you suggest such a thing, people have it hard enough as it is and reducing their wages isn’t going to help!”
Before you go off on a rant hear me out and then make your own call on the matter.
Here’s my premise:
“Getting rid of minimum wage will virtually eliminate all unemployment, workers will be treated better in the work place, and prices of many goods will become cheaper.”
Wow, what a claim! This is going to go fast, so try to keep up.
Minimum wage laws are well intended when passed and are typically based on cost of living and adjusted according to “inflation”. Unfortunately, free markets are no longer free and functional when you start to regulate things, especially wages.
It should disgust people on many levels that the government can dictate what an employer can pay an employee: in a free market this is a private contract between employer and employee, and heavily based around the concept of a fair wage being determined by what an employer will pay and what an employee will accept.
Folks, no one is making you work for any of these companies, if the contract you negotiate with them doesn’t include enough pay for you, then move onto something else.
What an employer can pay an employee is based off several factors, this list is not all inclusive or even partially completed but this is what I want to focus on right now.
What Competitors Are Paying For Similar Labor
For someone who stocks shelves in grocery stores, unless there is an abundance of labor (which we have now thanks to the government nearly 20% of our population is underemployed or unemployed), there is typically a wage competition between stores as to what they pay their employees.
Competition is good, this keeps businesses honest; they know if they don’t provide a competitive wage they will attract sub par workers or none at all.
You may be surprised to learn that businesses want to hire the best workers for their businesses because they’ve learned that translates into better profits, so they are willing to pay a little more for quality workers.
Profits
I hear people complain a lot about the profits a company makes and how come more of that isn’t shared with the employees. It’s very simple. YOU ARE REPLACEABLE.
Just because you work for a successful company doesn’t mean they should pay you more. If you work a common job and there are ample workers doing what you do, you will be paid similar to what other companies pay regardless if one company is more successful than the other.
Any bonuses or extra money they gave you is typically because you are a good worker and they want to keep you around. People make up the company, if you find yourself working for a company and not getting a raise while others around you are, that’s a wake up signal that you might suck at your job or you have a poor attitude; both of which, will hold you back in pay scale.
People like to target CEO pay, folks, CEO’s run the company, they are in limited supply. If a CEO can utilize resources and make decisions that make a company $1 billion in profit, do you they think are going to have any hesitation in paying him $50 million a year? Of course not.
Don’t complain, this is America, you can be a CEO too. If you think you can do what they do or you’re just as qualified, don’t complain, prove it. It’s called a corporate ladder for a reason, you’re supposed to climb.
The idea of minimum wage is offensive; if you’re worried about minimum wage it obviously shows that you have no intention of climbing the ladder or bettering yourself. Of course you’re going to be worried about minimum wage then, but the cold hard fact is, you can’t demand your way to wealth. The only way to wealth and more pay is to become more valuable to the market place.
A business will only exist if it can turn a profit, and not just a profit, most business owners and stock holders expect to be paid a fair share on their investment.
A business owner isn’t going to work at a business and give his time away for free for long while paying his employees. Stock holders are either going to shut down the business or sell their shares if they can’t turn a profit, it’s a simple numbers game.
So Here Is What Minimum Wage Really Does…
Creates Unemployment
When the minimum wage laws were upped, and upped, and they applied to our territories like American Samoa, jobs were lost and businesses were shut down. The fishing industry which could not afford to pay workers minimum wage as there was no profits to account for the increase in mandatory pay.
Imagine running your own fishing business for 50 years on your little island and then one day you’re told that you have to pay your workers more when most of them weren’t worthy of a pay increase and you had no money to pay them anyways, just because someone in Washington said so. Just like that, your long standing family business is no longer a business.
This effect caused severe unemployment in these areas. It’s not just places like this that suffer; Minimum Wage is applied equally across the United States, it is an average of what people should be paid to based on cost of living.
In some areas where cost of living was low, lower wages pre-existed the minimum wage laws and people were able to live there comfortably because the cost of living was cheaper.
Now with minimum wage laws enacted, many businesses in the lower cost of living areas had to shut down, leaving ex-employers and ex-employees standing in a field somewhere staring at each other. One side was a happy business owner, the other a happily employed employee, and because of regulation, they were both out of luck. You see the employee wanted to work and thought his wage was sufficient and the business owner was willing to pay it, but because of law, they could no longer co-exist in business. This in turn put them both on unemployment and welfare.
There are tons of people who are unemployed who would gladly work under minimum wage. They don’t take offense to it. Some are teenagers, some are elderly on social security, some are just looking for part-time work; but all of them have one common philosophy: “Making $5 an hour is better than making $0 an hour”
Minimum wage restricts people who are willing to work and it eliminates businesses that can’t afford to pay that much. What this does is forces businesses that can exist to pay a higher rate than they may have otherwise have chosen. This results in under staffing; you’ve seen it, ever sit in a store checkout line for 30 minutes or been unable to get help? Yes, that business is understaffed, trying to get by without shutting down.
You now have elderly, teenagers, and many others who would gladly accept less because they don’t need minimum wage; but are forced to compete and take up minimum wage jobs, by law. It also makes a HUGE category of jobs, called “minimum wage jobs” that are so highly competitive that it leads us into our next topic.
Makes Worse Working Conditions
Yes, minimum wage worsens your working conditions. Why? Because you are replaceable. They don’t care if they quit or if they fire you, there’s a lot of people that would gladly step in and take your job before you even take off your work clothes or walk out the door. This is simply due to the fact there is a surplus of unskilled workers who are seeking work at the bottom of the totem pole.
This is why it’s easier to improve yourself, but with wages artificially high, it makes it harder to improve yourself to a point above so many people. I’ve seen people with Bachelors Degrees hardly working for above minimum wage if not minimum wage themselves. How can you compete with people who have this type of education and experience in the lowest category of wages allowed by law?
You can’t, essentially, everyone who lacks skills or education or is just starting out in the job market, will find it very hard to get a job. The minimum wage law hurts those it seeks to protect. Odd, isn’t it?
Allows The Price of Goods To Stay Higher
When you have artificially high wages, you have artificially high prices; they go together. Goods are able to cost so much because people can afford to pay for them. If no one can buy a good or service because it’s too high, guess what? It has to come down, there’s no other way it can go. Businesses are in businesses to sell their goods and services, if they can’t do that, they go out of business.
What I’m really saying then, is that goods and services, aren’t too high, they are appropriately priced. They are appropriately priced from distortions in the market, such as, minimum wage.
When prices are too high and no one can afford them, those businesses either go out of business, or they lower the cost of the goods because the supply increases. Simple right?
Questions or Concerns?
But I work for minimum wage and it doesn’t pay my bills
Hey guess what? It’s not a jobs job to pay your bills. That’s your situation and your expenses. There are plenty of people who minimum wage is more than enough for who don’t have your situation. It’s your responsibility to pay for your bills not the jobs. If you need to make more, then improve yourself, and climb the ladder of pay.
How do you know wages are set too high?
By unemployment levels, if everyone was employed wages would naturally go up because there would be a lack of workforce to take on jobs meaning companies would have to offer more money to attract employees. High unemployment is the result of artificial wages being too high and other factors which this article does not cover.
Watch This Video For More Clarification
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