The Minimum Wage is Bad for Employers, Workers, and the Economy

The minimum wage is about freedom. Think about it. The government is forcing employers to pay people a certain amount of money. It’s no wonder that a majority of voters have no problem with the government taking ever higher amounts of money from workers in the form of taxes.

When the minimum wage goes up, union wages and benefits also go up. That’s why unions are always behind an increase in the minimum wage. Union workers do not make minimum wage. Unions can hold companies hostage to force up wages. They’re the fourth branch of government. When the minimum wage goes up, the wages of union employees have to go up as well, so they want new contracts to reflect a “proper” wage distance from the meager minimum wage earner.

Higher wages also mean higher prices. Not only will employers have to pay $9 per hour if Obama gets his way on an increase for the minimum wage, but Social Security and Medicare costs also go up for the employer on the increase.

Employers who hire minimum wage workers are usually working on small profit margins. If they get hit with something like a 25 percent increase in the minimum wage, it’s possible that to make up for the additional labor cost, an employer may have to lay off a fourth of his work force and distribute the work to the remaining employees. Unlike our government, businesses can’t print money.

Inexperienced young people are the first to suffer when the minimum wage goes up.

It used to be that when two people competed for the same job, a person who could undercut the amount an employer was willing to pay often would get the job.

An employer could take a risk on someone who lacked experience because he didn’t have to pay him what an experienced worker might demand. Many of the jobs available to teens were low skilled anyway.

By making it illegal to pay someone less than a government-mandated minimum wage, those with less experience are at a disadvantage. Employing teenagers is now a classic Catch-22 dilemma.

“Do you have experience?,” the shop owner asks.

The teenager is honest and shows initiative by answering, “No, but I’m willing to work at a lower wage to gain experience.”

“Sorry,” the shop owner says. “I would be breaking the law if I hired you for any amount less than the minimum wage. I can hire someone with experience at the same wage I’d have to pay you.”

“But I can’t get experience if you won’t hire me.”

“Tough luck. Complain to President Obama.”

Brian Levine, co-owner of Tropical Smoothie Café knows knows the law and the logic of the market place:

“A lot of it comes down to what we can afford, versus the hours they’re available to work. We are more or less, the minimum wage type of place. I would obviously prefer to pay minimum wage, but I’d also go for an adult and pay them an extra dollar an hour. They’re available, have more experience and are quicker to train.”

Renee Ward, founder of job posting site Teens4Hire.org, offers a similar story. “If you have two candidates for a job, and one has experience and will take $10 an hour, and the other is a teen with no experience, who do you think would get the job? When jobs aren’t there for anyone, it’s that much harder.”

Once again, government is the problem not the solution to job growth.

You might respond, “Sure, you can say this because you make a lot of money.” I don’t know what a lot of money is, but I sure make more than I did at my first job — $50 a week to wash pots and pans at a country club. Do the math. It’s a little more than a dollar an hour.

I worked a New Year’s Eve party at a restaurant when I was 16 with no hourly wage. The only money I got was in tips. The no-wage guarantee made me work very hard to get good tips. I made $20 for three hours of work. That was in 1966. That was big bucks back then.

I worked in the produce department at Kroger after school and weekends. This experience enabled me to get a job in Florida. I ended up working 60 hours a week. There was no union. My hard work was noticed, and I was offered the assistant manager’s job at a new store the company was opening.

It was these no to low hourly wages and disgusting working conditions that incentivized me to do better. I gained work experience and references. I worked through high school, had two jobs in college, and worked my way through graduate school as a custodian and bookstore assistant manager.

Get the government out of the wage business, and you’ll see the economy grow, prices fall, and wages that will keep up with expenses. The best workers will get the best jobs at the best prices.