Minimum Wage - popular political promise that delivers only job losses

Why the minimum wage, like price controls, will always work against the welfare of most workers.

This is in part a response to the remark from "anonymous" who sees the minimum wage as too low to provide for a family.

If you want to be paid far more than your job is worth, go to work for government. Every other job in a free society has a value dependent on what the job produces. When you place a floor or minimum on wages, all you do is eliminate all opportunities to work for less than that minimum. When any employer finds jobs that are costing more than they are producing, those jobs are changed, outsourced or eliminated one way or another. "Downsizing" is another result of this and is just another effort for employers to survive. Jobs are available as they offer employers opportunities for profit. Jobs that are not profitable to employers for any reason are nothing but employer paid welfare. They will be eliminated by the employer cutting the job or eventually going bankrupt.

Recently, politicians in one American city decided to raise the minimum wage in their city to $10.00 an hour. Fortunately, for the citizens of that city, the proposal was defeated. Current efforts of our national Congress to raise the federal minimum wage may be successful to the benefit of only those politicians who can boast of their efforts “to provide a living wage for all Americans.” That statement, like so many others from our politicians, waves a popular flag of helping the little guy (the almost totally ignorant poor) while actually slashing available jobs particularly for poor young people. All any minimum wage law does is eliminate all job opportunities whose benefits to an employer are lower than that minimum.

It sounds so appealing to say, “I’m raising your pay by raising the minimum wage.” or, “Every American who wants to work should be paid a living wage.” or, “How can anyone raise a family on a minimum wage?” Politicians promise much which eager voters eat up, but what they deliver is often exactly the opposite of what they promise. With the federal minimum wage now far below the previous percentage of the average wage, Americans are enjoying a booming economy with entry level jobs mostly starting above minimum wage standards. This means there are jobs available for part time or young and student workers where they can supplement family incomes and gain work experience. These are the jobs that disappear when the minimum wage is raised. Examples are legion and have even decimated the economies of entire cities and areas.

What the politicians who want to raise the minimum wage should really be saying is, “I’m eliminating all chances for employment that pays less than the minimum wage.” or, “All jobs that are worth less than the new minimum wage to employers are hereby eliminated.” or, “The higher I can raise the minimum wage the more job opportunities will be eliminated.” or, “If your children are willing to supplement the family income by working for less than the minimum wage, I won’t let them have a job.” Of course to do so would be political suicide so this truth is never uttered by politicians.

Price controls, like minimum wages get occasional mileage from politicians, often with disasterous results including shortages, black markets with high prices and lack of sufficient production. Price controls, like other government restrictions, often drive producers out of business by making it unprofitable. A recent, almost tragic example is the shortage of flue vaccine last winter. Price restrictions placed by our government (and I believe several others) on flue vaccines combined with the possibilities of costly litigation, drove all American producers out of the vaccine business. The potential profits were so small and the risks so great as to make manufacture of the vaccine unatractive. Then, when a problem arose with one of the few remaining foreign suppliers, a huge and dangerous shortage was immediately created. Canada is now experiencing shortages of many critical drugs and have modified their price controls to allow some degree of flexibility. Negotiated prices are fine and while they may create some of the same problems as price controls, those problems are usually limited and frequently, the negotiated price is supplemented by the agency doing the negotiations. In this instance, someone still pays for the higher price, government (us) or the agency.