CNN Money reports on the upcoming increases in the minimum wage in several states. Tami Luhby authored the piece, and her obvious slant is that the new minimum will put money into the pockets of those wage earners, a real benefit. That is quite true, yet the laws of economics cannot be legislated that easily. Our federal and state governments are convinced that helping low wage earners is just that simple.
The $7.25 federal minimum wage equates to about $15,000 per year, which we are reminded is below the poverty level for a family of four. Is there some moral standard or law which requires an employer to pay above the poverty level for a family of four? Maybe the employer has a family of three in mind when he sets his wage scale. Comparing the minimum wage to a poverty level is quite absurd. It is the employee who should decide what income he requires and then seek to achieve that. Could it be that lower pay scale jobs are not meant to support a family? Suppose that an employer offers $5.00 per hour. Is the prospective employee obligated to take the job and live in poverty? The employer only makes a offer of employment at a given wage, and the prospective employee is free to accept or reject the offer. At least that is the way it should work in a free market.
Jen Kern, minimum wage coordinator at the National Employment Law Project, an advocacy group, is quoted: “We can’t afford to have workers’ buying power erode when, in fact, we need spending to get the economy going”. That kind of reasoning would support a law raising everyone’s wage or salary, by say 1% or 2%. Increasing earnings across the board would certainly boost consumer’s buying power.
Few people give any thought to what wage rates the employer can afford to pay. In a free market the employer is competing with others to hire workers, and the wage rate should be set by the availability of workers with the specified skills and employer demand. An arbitrary legal increase in the wage rate does not make the worker more productive or valuable to the employer. Lower pay scale employees are more likely to have their jobs eliminated, merged into other positions, or replaced with technology when the minimum wage is raised. Forcing an employer to pay more for the same work may result in layoffs or fewer people hired.
Imagine a worker who is facing a lay off because the employer can no longer afford to pay him $7.25 per hour, but the employer might consider retaining the worker at a 10% pay reduction. A salaried employee might be given the option to take a pay cut to keep his job, if times get tough for the employer, but the minimum wage earner has no such flexibility. He gets terminated.
One of our fundamental rights is the right to property. Without it we are slaves. Our time is our property. We own it and may use it and dispose of it however we like, except that the minimum wage limits that right. If we cannot sell our time at whatever price we wish, then do we really own our time? Selling our time at $6.00 per hour is better than trying to sell our time at $7.25 per hour when no employer will hire at that rate.
The federal government and states have encroached upon the free market that should exist in labor rates. Artificially setting a minimum labor rate infringes upon the employee’s and the employer’s right to voluntarily agree upon a pay scale. The intention may be good, but the result is not, and ultimately hurts the wage earner.
Likely Related Posts: