A collection of arguments to counter calls for increasing the Minimum Wage

Readability

A collection of arguments to counter calls for increasing the Minimum Wage

The fed­eral gov­ern­ment, and many states, have recently increased, or are in the process of increas­ing, the min­i­mum wage despite over­whelm­ing evi­dence of neg­a­tive impacts caused by such gov­ern­ment inter­ven­tion. For this arti­cle I’ve assem­bled a col­lec­tion of resources to aid those who wish to counter this non­sense. Con­sid­er­ing the avalanche of pos­i­tive, yet deeply unsound, report­ing on this vital issue, it is essen­tial that we counter this mis­in­for­ma­tion as often as possible.

This quote is from an arti­cle by the Mises Insti­tute titled How
Min­i­mum Wage Laws Increase Poverty
. The arti­cle was pub­lished back in 2014.

Rais­ing the min­i­mum wage is a for­mula for caus­ing unem­ploy­ment among the least-​skilled mem­bers of soci­ety. The higher wages are, the higher costs of pro­duc­tion are. The higher costs of pro­duc­tion are, the higher prices are. The higher prices are, the smaller are the quan­ti­ties of goods and ser­vices demanded and the num­ber of work­ers employed in pro­duc­ing them. These are all propo­si­tions of ele­men­tary eco­nom­ics that you and the Pres­i­dent should well know.

This next sec­tion, from the same arti­cle. con­tains many alter­na­tive
pro­pos­als that will actu­ally increase the stan­dard of liv­ing for every­one in
this country.

If rais­ing the stan­dard of liv­ing of the aver­age worker is your and the President’s goal, you should aban­don your efforts to raise the min­i­mum wage. Instead, you should strive to elim­i­nate all gov­ern­ment poli­cies that restrain the rise in the pro­duc­tiv­ity of labor and thus in the buy­ing power of wages.

If your goal is to raise the wages specif­i­cally of the lowest-​paid work­ers, you should strive to elim­i­nate every­thing that lim­its employ­ment in the better-​paid occu­pa­tions, most notably the forcible impo­si­tion of union pay scales, which oper­ate as min­i­mum wages for skilled and semi-​skilled work­ers. In caus­ing unem­ploy­ment higher up the eco­nomic lad­der, union scales serve to arti­fi­cially increase the num­ber of work­ers who must com­pete lower down on the eco­nomic lad­der, includ­ing at the very bot­tom, where wages are low­est. To the extent that occu­pa­tions higher up could absorb more labor, com­pet­i­tive pres­sure at the bot­tom would be reduced and wages there could rise as a result.

Abol­ish­ing or at least greatly lib­er­al­iz­ing licens­ing leg­is­la­tion would work in the same way. To the extent that larger num­bers of low-​skilled work­ers could work in such lines as dri­ving cabs, giv­ing hair­cuts, or sell­ing hot dogs from push carts, the effect would also be a reduc­tion in com­pet­i­tive pres­sure at the bot­tom of the eco­nomic lad­der and thus higher wages there.

The prin­ci­ple here is that we need to look to greater eco­nomic free­dom, not greater gov­ern­ment inter­ven­tion, as the path to eco­nomic improve­ment for every­one, espe­cially the poor.

Here is a quote from the arti­cle Min­i­mum
Wage Mad­ness
by Thomas Sowell.

There is noth­ing mys­te­ri­ous about the fact that most peo­ple start off in entry level jobs that pay much less than they will earn after they get some work expe­ri­ence. But, when min­i­mum wage lev­els are set with­out regard to their ini­tial pro­duc­tiv­ity, young peo­ple are dis­pro­por­tion­ately unem­ployed — priced out of jobs.

And here is another quote from the same article.

Unem­ployed young peo­ple lose not only the pay they could have earned but, at least equally impor­tant, the work expe­ri­ence that would enable them to earn higher rates of pay later on.

Minori­ties, like young peo­ple, can also be priced out of jobs. In the United States, the last year in which the black unem­ploy­ment rate was lower than the white unem­ploy­ment rate — 1930 — was also the last year when there was no fed­eral min­i­mum wage law.

This quote by Thomas Sow­ell, which is from his book Basic Eco­nom­ics: A Com­mon Sense Guide to the Econ­omy is one of the best argu­ments against increas­ing the min­i­mum wage.

Unfor­tu­nately, the real min­i­mum wage is always zero, regard­less of the laws, and that is the wage that many work­ers receive in the wake of the cre­ation or esca­la­tion of a government-​mandated min­i­mum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.

This arti­cle Min­i­mum
Wage Cru­elty
by Wal­ter E. Williams also con­tains a win­ning argu­ment against
rais­ing the min­i­mum wage.

Some think that it’s greed that moti­vates busi­ness­men to seek sub­sti­tutes for labor, such as kiosks, as wages rise. But don’t blame busi­ness­men; just look in the mir­ror. Sup­pose both McDonald’s and Burger King are faced with higher labor costs as a result of higher min­i­mum wages. McDonald’s low­ers its labor costs by installing kiosks and lay­ing off work­ers, but Burger King decides to not auto­mate but instead keep the same amount of labor. To cover its higher labor costs, Burger King must charge higher prices for its meals, whereas McDonald’s gets by while charg­ing lower prices. Which restau­rant do you think peo­ple will patron­ize? I’m guess­ing McDonald’s. What cus­tomers want is an impor­tant part of a company’s decision-​making.

The final argu­ment against rais­ing min­i­mum wage comes from an unlikely
source, a CBS News arti­cle called NYC
restau­rants cut­ting staff hours as min­i­mum wage hits $15
.

A New York City Hos­pi­tal­ity Alliance sur­vey of 574 restau­rants showed that 75 per­cent of full-​service restau­rants reported plans to reduce employee hours this year in response to the lat­est man­dated wage increase. Another 47 per­cent said they would elim­i­nate jobs in 2019. Eighty-​seven per­cent of respon­dents also said they would increase menu prices this year.

The federal government, and many states, have recently increased, or are in the process of increasing, the minimum wage despite overwhelming evidence of negative impacts caused by such government intervention.   For this article I’ve assembled a collection of resources to aid those who wish to counter this nonsense.  Considering the avalanche of positive, yet deeply unsound, reporting on this vital issue, it is essential that we counter this misinformation as often as possible.

This quote is from an article by the Mises Institute titled How Minimum Wage Laws Increase Poverty.   The article was published back in 2014.

Raising the minimum wage is a formula for causing unemployment among the least-skilled members of society. The higher wages are, the higher costs of production are. The higher costs of production are, the higher prices are. The higher prices are, the smaller are the quantities of goods and services demanded and the number of workers employed in producing them. These are all propositions of elementary economics that you and the President should well know.

This next section, from the same article. contains many alternative proposals that will actually increase the standard of living for everyone in this country.

If raising the standard of living of the average worker is your and the President’s goal, you should abandon your efforts to raise the minimum wage. Instead, you should strive to eliminate all government policies that restrain the rise in the productivity of labor and thus in the buying power of wages.

If your goal is to raise the wages specifically of the lowest-paid workers, you should strive to eliminate everything that limits employment in the better-paid occupations, most notably the forcible imposition of union pay scales, which operate as minimum wages for skilled and semi-skilled workers. In causing unemployment higher up the economic ladder, union scales serve to artificially increase the number of workers who must compete lower down on the economic ladder, including at the very bottom, where wages are lowest. To the extent that occupations higher up could absorb more labor, competitive pressure at the bottom would be reduced and wages there could rise as a result.

Abolishing or at least greatly liberalizing licensing legislation would work in the same way. To the extent that larger numbers of low-skilled workers could work in such lines as driving cabs, giving haircuts, or selling hot dogs from push carts, the effect would also be a reduction in competitive pressure at the bottom of the economic ladder and thus higher wages there.

The principle here is that we need to look to greater economic freedom, not greater government intervention, as the path to economic improvement for everyone, especially the poor.

Here is a quote from the article Minimum Wage Madness by Thomas Sowell.

There is nothing mysterious about the fact that most people start off in entry level jobs that pay much less than they will earn after they get some work experience. But, when minimum wage levels are set without regard to their initial productivity, young people are disproportionately unemployed — priced out of jobs.

And here is another quote from the same article.

Unemployed young people lose not only the pay they could have earned but, at least equally important, the work experience that would enable them to earn higher rates of pay later on.

Minorities, like young people, can also be priced out of jobs. In the United States, the last year in which the black unemployment rate was lower than the white unemployment rate — 1930 — was also the last year when there was no federal minimum wage law.

This quote by Thomas Sowell, which is from his book Basic Economics: A Common Sense Guide to the Economy is one of the best arguments against increasing the minimum wage.

Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.

This article Minimum Wage Cruelty by Walter E. Williams also contains a winning argument against raising the minimum wage.

Some think that it’s greed that motivates businessmen to seek substitutes for labor, such as kiosks, as wages rise. But don’t blame businessmen; just look in the mirror. Suppose both McDonald’s and Burger King are faced with higher labor costs as a result of higher minimum wages. McDonald’s lowers its labor costs by installing kiosks and laying off workers, but Burger King decides to not automate but instead keep the same amount of labor. To cover its higher labor costs, Burger King must charge higher prices for its meals, whereas McDonald’s gets by while charging lower prices. Which restaurant do you think people will patronize? I’m guessing McDonald’s. What customers want is an important part of a company’s decision-making.

The final argument against raising minimum wage comes from an unlikely source, a CBS News article called NYC restaurants cutting staff hours as minimum wage hits $15.

A New York City Hospitality Alliance survey of 574 restaurants showed that 75 percent of full-service restaurants reported plans to reduce employee hours this year in response to the latest mandated wage increase. Another 47 percent said they would eliminate jobs in 2019. Eighty-seven percent of respondents also said they would increase menu prices this year.