The folly of raising the minimum wage 11


There should be no minimum wage at all in the interest of a thriving economy.

But if there is going to be such a misconceived thing, it should be very low indeed.

Many minimum wage jobs can be performed by machines. Automation will be hastened by the imposition of a minimum wage.

Minimum wage enforcement can only create unemployment.

It is not what an employee needs that should determine his wage, but how much he can contribute to the business that employs him. If his job earns the business at least three times his wage, he is worth what he is paid. The more he contributes, the more he is worth. If he needs more, he can get it by contributing more. The bigger and better his contribution, the better he’ll do for himself.

This is the way capitalism – what Adam Smith called “the natural order of liberty” – works.

From each according to his need, to each according to his ability.

Posted under Capitalism, Commentary, Economics by Jillian Becker on Friday, November 14, 2014

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This post has 11 comments.

  • Don L

    Still close enough to Vet Day.

    Came across the birth of a man photo.

    Tell me atheists don’t feel!

    • Don L

      This photo rips my heartout.

      It proves I feel

      It energizes my thinking to fight the delusional!

      • liz

        Same here.

  • Don L

    Comment II:

    Of all the lies progressives have foisted, Lincoln, FDR, Experts running the economy…., one of the most detrimental is to encourage one to believe that the job that they perform, as an employee, is their job. The job belongs to the company…the employee is the one the company picked to do their job.

    A person is a product, a service or the entrepreneur risking all to bring their idea to market. Or, a taker living off the pity of others. The EXCEPTION being those who are in fact are or have become disabled and cannot care for themselves. Empathy is not pity. And, in all cases the government can never deliver the appropriate care and assistance that local, on scene, and private organizations can deliver: one-size-does-not-fit-all and hand up beats handouts!

    Once people begin to realize that individually they are the means of producing income, they can recognize they need to develop skills that get them hired to fill jobs whereas they are in competition. Or, they can do due diligence and analysis and jump in and risk bringing their idea to market…win or lose (no draws). Organizing into unions in order to ‘take’ more than is deserved (at other’s expense) and politicians dangling carrots of hire wages for votes…it’s god’s doing…morally WRONG!!!

    (Burro — Mouton Cadet Bordeaux tonight; more ‘n $3.99…hic. Back to Boone’s Farm after this deliciousness. LOL.)

    • The Burro

      Mouton Cadet? Mamma Mia: remind me not to take you out to dinner!

      Boone’s Farm: I will look into that one.

      • Don L

        Only drank, drunk, drinked while inhaling pot. So, if you have not, given new conservative study, I have smaller brain.

        Not small enough to incorporate the rationale to want the SOB that makes that young man’s pain to pay the price!

        • Burro

          Aha! I’ll buy you say: done deal!!

          There is a great difference ‘twixt the Bray and the Hee- Haw. The Hee-Haw usually represents the utterance typically after an amusing moment, while the Bray is much more an utterance which is the result of a sudden surprise or a response to a threat.

          By way of explanation, one may accuse Burro of being a Democrat, which would lead one to receive a sharp kick in the ass by the Ass. This could lead one to a “Bray.”

          On the other hand, one may state “A Democrat tells the truth” which may first cause shock, then one to produce a quiet chortle leading to a potential Hee-Haw.

          At no time must the “Bray” be confused with THE “Brae” which is both filled with meaning and potency. The Brae in this case is the immortalized image of the hillside filled with poetic meaning such as the grassy banks of the North of England slopes.

          Waxing eloquent as us Burros are prone to, a most lovable use of the Brae may be found in the sad but wonderful poem by the great Robert Burns, dated 1791 by the Robert Burns Society. The first portion of this beauty is:

          Flow gently, sweet Afton! amang thy green braes, Flow gently, I’ll sing thee a song in thy praise;
          My Mary’s asleep by thy murmuring stream,
          Flow gently, sweet Afton, disturb not her dream.

          And with a misty eye and dropped ear on my way,
          I go to end a very long day.
          (Last two lines courtesy Burro Benedictine, Chief of Monastic Department).

          The Burro

          • Don L

            Well done!

  • Don L

    An employee is always paid before the entrpreneur realizes any profit or, the often disregarded, LOSS. A wage is a cost and especially in highly competetive minimal margin businesses increasedcosts cannot necessarily be absorbed. Ultimately and always it is consumers that set prices; notwithsatnding the ignorants who believe price increases have no effect on demand/consumer choices. The reality is that government, as opposed to free market, increased wages inevitably raises all prices which negates the wage increase but increases unemployment. And, emotional ‘should’ policies based on the ‘think with your heart’ delusion of ‘living wage’ irrefutably and always results in NO WAGE for more and more real people!

    Minimum Wage is a political con job, a scam, a hoax, a fraud…a Dr Gruberism!!!

    Excerpted from the 1995 book
    “Making Economic Sense”,
    chapter 36, “Outlawing Jobs: The Minimum Wage, Once More.”
    by Murray N. Rothbard

    There is no clearer demonstration of the essential identity of the two political parties than their position on the minimum wage. The Democrats proposed to raise the legal minimum wage from $3.35 an hour, to which it had been raised by the Reagan administration during its allegedly free-market salad days in 1981. The Republican counter was to allow a “subminimum” wage for teenagers, who, as marginal workers, are the ones who are indeed hardest hit by any legal minimum.

    This stand was quickly modified by the Republicans in Congress, who proceeded to argue for a teenage subminimum that would last only a piddling 90 days, after which the rate would rise to the higher Democratic minimum (of $4.55 an hour). It was left, ironically enough, for Senator Edward Kennedy to point out the ludicrous economic effect of this proposal: to induce employers to hire teenagers and then fire them after 89 days, to rehire others the day after.

    Finally, and characteristically, George Bush got the Republicans out of this hole by throwing in the towel altogether, and plumping for a Democratic plan, period. We were left with the Democrats forthrightly proposing a big increase in the minimum wage, and the Republicans, after a series of illogical waffles, finally going along with the program.

    In truth, there is only one way to regard a minimum-wage law: it is compulsory unemployment, period. The law says, it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum-wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.

    All demand curves are falling, and the demand for hiring labor is no exception. Hence, laws that prohibit employment at any wage that is relevant to the market (a minimum wage of 10 cents an hour would have little or no impact) must result in outlawing employment and hence causing unemployment.

    If the minimum wage is, in short, raised from $3.35 to $4.55 an hour, the consequence is to disemploy, permanently, those who would have been hired at rates in between these two rates. Since the demand curve for any sort of labor (as for any factor of production) is set by the perceived marginal productivity of that labor, this means that the people who will be disemployed and devastated by this prohibition will be precisely the “marginal” (lowest wage) workers, e.g. blacks and teenagers, the very workers whom the advocates of the minimum wage are claiming to foster and protect.

    The advocates of the minimum wage and its periodic boosting reply that all this is scare talk and that minimum-wage rates do not and never have caused any unemployment. The proper riposte is to raise them one better; all right, if the minimum wage is such a wonderful antipoverty measure, and can have no unemployment-raising effects, why are you such pikers? Why you are helping the working poor by such piddling amounts? Why stop at $4.55 an hour? Why not $10 an hour? $100? $1,000?

    It is obvious that the minimum-wage advocates do not pursue their own logic, because if they push it to such heights, virtually the entire labor force will be disemployed. In short, you can have as much unemployment as you want, simply by pushing the legal minimum wage high enough.

    It is conventional among economists to be polite, to assume that economic fallacy is solely the result of intellectual error. But there are times when decorousness is seriously misleading, or, as Oscar Wilde once wrote, “when speaking one’s mind becomes more than a duty; it becomes a positive pleasure.” For if proponents of the higher minimum wage were simply wrongheaded people of good will, they would not stop at $3 or $4 an hour, but indeed would pursue their dimwit logic into the stratosphere.

    The fact is that they have always been shrewd enough to stop their minimum-wage demands at the point where only marginal workers are affected, and where there is no danger of disemploying, for example, white adult male workers with union seniority. When we see that the most ardent advocates of the minimum-wage law have been the AFL-CIO, and that the concrete effect of the minimum-wage laws has been to cripple the low-wage competition of the marginal workers as against higher-wage workers with union seniority, the true motivation of the agitation for the minimum wage becomes apparent.

    This is only one of a large number of cases where a seemingly purblind persistence in economic fallacy only serves as a mask for special privilege at the expense of those who are supposedly to be “helped.”

    In the current agitation, inflation — supposedly brought to a halt by the Reagan administration — has eroded the impact of the last minimum-wage hike in 1981, reducing the real impact of the minimum wage by 23 percent. Partially as a result, the unemployment rate has fallen from 11 percent in 1982 to under 6 percent in 1988. Possibly chagrined by this drop, the AFL-CIO and its allies are pushing to rectify this condition, and to boost the minimum-wage rate by 34 percent.

    Once in a while, AFL-CIO economists and other knowledgeable liberals will drop their mask of economic fallacy and candidly admit that their actions will cause unemployment; they then proceed to justify themselves by claiming that it is more “dignified” for a worker to be on welfare than to work at a low wage. This of course, is the doctrine of many people on welfare themselves. It is truly a strange concept of “dignity” that has been fostered by the interlocking minimum-wage–welfare system.

    Unfortunately, this system does not give those numerous workers who still prefer to be producers rather than parasites the privilege of making their own free choice.

    • Excellent, Don L!

      I hoped you would write on this subject. Your comment is my wish fulfilled.

      • Don L

        Thank you and my pleasure.

        Minimum wage is a topic that is just amazing. Only the truly deceitful or truly ignorant support the idea. You can tell the ignorant…a glaze comes over their eyes and all reason leaves them as emotion spews forth.

        Interestingly, I believe people DO understand that when you raise the price of milk, beef, gas, et ceteras that the demand for these things drops. Less is produced so cows and steers are killed and wells are capped. Yet, they don’t make the connection when it comes to wages. Perhaps the problem is they don’t understand that wage is another word for price…the price of labor…which is like milk, beef or oil a commodity.

        What fools these mortals be or the best of all, forgive them for they know not what they do. LOL! What they do do is raise prices for all and put thousands out of work…onto the tax payer dole. Then they wonder why.

        Haven’t even gotten to the part the FED plays in artificially raising wages; and therefore unemployment…another day!