Today, any non-exempt person working in a business covered by the minimum wage law gets paid at least $7.25 per hour. And there is a move today by the political Left to more than double that rate to $15.00 per hour.
A mandated minimum wage requires businesses to pay everyone they hire $7.25 or more for every hour they work starting with their very first hour on the job, whether they know how to do the job or not. Minimum wage jobs have minimal skill requirements. Persons holding these jobs often are young people who have little or no skills or experience.
Most minimum wage supporters view wages exclusively in terms of what is good for the worker, and these days that frequently means they expect employers to pay all workers a “living wage,” whatever that is. And it has no regard for whether they do their job well, or how much their job contributes to the company’s success. It also doesn’t matter whether workers need a living wage. Teenagers and other young workers who still live at home, and many college students don’t need a living wage.
What is good for the employer, who provides jobs for tens of millions of Americans to earn money to live on, is less important, and sometimes not important at all. And many of these supporters do not understand how businesses operate and how difficult running a business can be.
Why not base wages on an agreement between the employee and the employer? Some people might need or want a lower wage if they can just get a job. Someone with skills the employer seeks for a critical or important job will be offered higher wages at a level determined by the employer’s financial situation. If the applicant isn’t satisfied with that, she or he can ask for more money, or look elsewhere for a job.
Competition among businesses for sales of products and services is a good thing. It helps keep prices down, and it also helps to keep businesses on their toes to do the best they can to produce quality goods and services and run a respectable business.
Employers are interested in employing people with the skill levels they need, and will offer those job applicants a wage reflecting the applicant’s skills and experience that also fits the company’s financial requirements.
After having a paper route for a few years, I got a real job working weekends at the age of fifteen. In those days the minimum wage was fairly new, and was set at $1.00 per hour. I learned my job fairly quickly and did it pretty well. I got a raise when the minimum wage was increased to $1.10 an hour.
Why did I not get a raise based on my job performance after I learned the job? Because the job I had was a basic job that didn’t require a high level of skill — meaning that there were lots of people who could learn to do the job satisfactorily — and I had been on the job a relatively short time.
Furthermore, the wage was based on the skill requirement, which was at the lowest level. Those who had jobs that required higher skill levels made more money than I did. That’s life.
The $7.25 minimum wage makes it more difficult for businesses to remain profitable than a system where employees are paid based on the financial circumstances of the business they work for, and the job they perform. Employers and employees should agree on wages, and, again, if they can’t agree, employees may look elsewhere for a better-paying job.
And, a minimum wage requirement at any level is a much easier pill to swallow for large corporations than for small businesses.
Addressing the increase in the minimum wage the Mises Institute’s Dakota Hensley wrote: “This is under the assumption that having a minimum wage helps workers and makes corporations pay their fair share.”
However, he points out the downsides of a minimum wage, and the greater downsides of a $15 per hour minimum. “It keeps low-skilled (often black or other ethnic minority) workers from finding employment, forcing them to depend on government, and leads to closures of small businesses (especially black-owned businesses) which benefits corporations.” The fewer small business competitors large businesses have, the better it is for them.
Hensley cites information from the Congressional Budget Office saying a minimum wage hike would lift 900,000 out of poverty but put 1.4 million — 55 percent more than it would help — out of work. The latter group includes less educated people with low or no skills. “It's not plumbing or automotive mechanics or carpentry. Those jobs pay tens of thousands,” Hensley noted. “Those jobs require trade school, not just a high school diploma. A minimum wage punishes those who were born poor and weren't given the opportunities to go to trade school or college and get those skills.”
He concludes by saying, “Minimum wage laws hurt low-skilled, often black, workers. Implementing these laws leads to the growth of big business at small business' expense. To be truly pro-labor and anti-corporate, we need to abolish the minimum wage.”
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