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Minimum Wage – Maximum Hypocrisy

By Theresa Fritz Camoriano

What would happen if there were a minimum hourly wage for lawn care services, and you had the option of hiring a man with a machete at $6 per hour or a man with a $3,000 mower at $24 per hour?  The man with the machete would take all day to cut your lawn, resulting in a cost to you of $48, and the man with the mower would take one hour, resulting in a cost of  $24.  Which man would you hire?

Obviously, you would hire the man with the mower, because it would cost you less to get the job done.    

What would happen to the man with the machete?  He would be unemployable, because he would be too expensive.  If he could charge less, say $3 per hour, so he could do the job for the same $24, then he could compete with the man with the mower.  However, since the law prohibits him from charging less, he is out of luck.

So who benefits from the $6 minimum wage – the man with the mower or the man with the machete?  Obviously, the man with the mower benefits, because, thanks to the minimum wage, he faces less competition.    

If we consider people’s skill levels to be tools similar to the machete and the mower, then we can see how a minimum wage harms the person with a lower skill level (i.e. the person wielding the machete) while benefiting the person with a higher skill level (i.e. the person with the mower).  So, the minimum wage benefits union workers and other higher skilled workers at the expense of the lower skilled workers (those whom the politicians claim to be helping when they raise the minimum wage), making many low skilled workers unemployable.

It is a pity that most of the American people do not understand how the minimum wage actually harms the very people it is said to help, and it is sickening that so many politicians who know the truth are willing to sacrifice the livelihoods of many powerless, low skilled workers in return for union support or because they do not want to be accused of being cold-hearted and uncaring.   

Here is a rule of thumb to consider when judging any government program:  If the program shifts power to the government and away from the individual, then it is a fairly safe bet that politicians are using that power to benefit themselves and their powerful friends at the expense of the powerless.  The powerful friends may be unions or large corporations, but they almost certainly are not low skilled workers, small businesses, or entrepreneurs. 

In the case of the minimum wage, power is being shifted from the worker and employer, who previously were free to strike any deal that was mutually beneficial, to the government, which prohibits deals at lower than the minimum wage. 

Many people believe that employers are very powerful and would take unfair advantage of workers if there were not such “protections” as the minimum wage.  However, employers in a free market are no more powerful than you are when you decide which lawn mower service to hire.  They make the same kinds of calculations you would make, and they are subject to market competition just as you are when you go to hire a lawn mower service.  It is only when they get in cahoots with the government that they become more powerful than the rest of us.

Do you really think you would be able to find someone to mow your yard for $3 if there were no minimum wage? Not very likely, and, if you did, your neighbor soon would be bidding up the price to get those services, so the sweet deal would not last very long.

However, you might be able to find someone to mow the yard for $3 if you also threw in some training or tutoring that would help the person develop his skills so he could earn more money later on.  Or you might be able to find a teenage boy to mow your yard for $3 if your teenage daughter and her friends were swimming in the backyard pool and invited him to join them after he finished mowing.  In other words, there might be ways to make a good deal that would benefit both parties if they were free to be creative, but the minimum wage makes such mutually beneficial deals illegal.

Please don’t be sucked into the class warfare, “us” against “them” baloney, with employers being characterized as the powerful bad guys and employees as the vulnerable good guys.  It simply is not true.  The truth is that we are all both employers and employees, subject to the limits placed on us by market competition, and we are all going to try to strike the best deal we can.  Only those parties who are powerful enough to buy the politicians and get them to skew the rules will benefit from a shift of power from the people to the government.  The rest of us are far better off leaving freedom in the hands of individual people (i.e. in our own hands), allowing us to be creative and to strike the best bargain we can.

See also:

Sticking it to low skilled workers – John Stossel Let's face it. The higher minimum wage is a feel-good law. A slight increase will pass because politicians and poverty activists will be able to say they have "done something" for the poor, while the victims of the policy go unnoticed. Those who can't find jobs because they produce too little are not likely to blame the law or the politicians who tried to "help" them. Then the resulting unemployment will justify expansion of the welfare state. http://www.townhall.com/columnists/JohnStossel/2007/01/10/sticking_it_to_low-skilled_workers

Minimum wage and common sense Labor economists, for example, point out that a 10 percent forced increase in wages would increase unemployment by 1 to 3 percent… Failure to think through the assumptions of raising the minimum wage and disregard for the economic effects will not do anyone any good. Legislators ought to think long and hard before they lead with their hearts and ignore what their heads ought to be telling them. http://www.acton.org/ppolicy/comment/article.php?article=361&fromemail

Something for nothing – minimum wage A real minimum wage, one that measurably alters the welfare of the poor, will also cause the widespread loss of employment opportunities. http://gcc.savvior.com/Something_for_Nothing.php

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