Should the minimum wage in this country be increased to keep up with inflation or is $5.15 per hour adequate compensation from entry-level employees? Are those in opposition to a minimum wage increase cold and uncaring? Is it really the boost to a minimum wage earner’s economic situation that they expect?
Perhaps a better alternative to this minimum wage increase is a minimum wage elimination. Businesses struggle to find profit between reasonable, marketable price points and the overhead required to stay in business. A large part of this overhead is wages paid to employees.
If an employee is paid $5 an hour for a position that produces $9 an hour for the business then he is profitable and worth his pay. The remaining profit keeps the lights on, the doors open, and the shelves stocked with product. If Uncle Sam decides to tip the scales in favor of the employee to gain favor with his constituents then “big bad business” feels the squeeze.
There! We’ve effectively “stuck it to the man”. Now, to remain in business, the employer, like many other employers in their shoes, needs to raise prices or reduce overhead. Either way, the bottom-wrung employees get the short end of the stick.
By raising minimum wage the dollar bill is devalued. Let’s say a minimum wage employee earns enough weekly income to purchase a gallon of milk, a loaf of bread, and a carton of eggs. Our heart goes out to him and others like him so we force employers to increase his wages. For maybe two weeks this employee can add two boxes of popsicles to his weekly order. Very soon, however, the cost of all his groceries increases so the businesses selling them can remain in the black after paying out more money to their employees who still perform their same job. This same employee with his new found, government-mandated pay raise can still only afford a gallon of milk, a loaf of bread, and a carton of eggs.
Unfortunately, the employees above him on the pay scale, those who aren’t affected by the increase in minimum wages, are facing the very same devaluation of their dollar bill as well. The intended recipient of the increase still hasn’t benefited, and those who weren’t in the scope of the legislation are adversely affected. There is no clear winner in this scenario.
The other unexpected consequence to bottom wage earners is unemployment. When their wages exceed their worth they become an expense to a business. The logical conclusion in their case is unemployment. A business will not continue to employ a person who isn’t producing more income for the company than they are being paid. In the free-enterprise system, wages increase when worth increases. To increase a person’s worth they gain skill and/or experience.
Understand that when businesses succeed people that work for those businesses succeed. If a business operates with large, “unfair” margins, the employees benefit with often higher salaries, increased job security, and occasionally regular bonuses. Put the squeeze on those big, bad, greedy businesses by increasing their overhead through taxation or forced wage increases and it is the worker that loses. He or she will lose as the employee of the business by being fired or forced to work harder to compensate for the pay raise. The bottom-wrung worker also loses as a consumer now facing accelerated inflation.
The minimum wage is not intended to provide a house in out in the country and two cars. In fact, the minimum wage shouldn’t be relied on for an apartment and a bus ticket. Think of it as a probationary wage paid to workers who haven’t proven themselves in the work place. Those who are worth more will get paid more. Those who are worth more, but don’t get paid more find other employment or start a business. The employer who isn’t willing to give adequate compensation for higher-skilled employees ends up the loser when quality help seeks employment with, perhaps, his competitor. Most businesses offer starting wages above minimum wage at this point anyway. Ultimately a booming economy will eliminate the need for minimum wage.
Workers who are overpaid are workers who aren’t in demand by anyone. They are nearly unemployable thanks to the increased minimum wage. They can’t accept a more reasonable pay rate if they wanted to. Increasing their worth to an employer is now no longer an option, but a requirement to get a job.
If the minimum wage were abolished, inflation would be a non-issue for the near and maybe distant future. Entry level workers will enjoy a stronger dollar and readily available work. If an employer expects to keep them on staff they will be forced to offer acceptable incentive. Should the employee feel taken advantage of by being underpaid they will search for better wages with a different employer.
If a worker wants to command a higher pay rate they will simply increase their skills and experience, and, thereby, increase their worth to an employer. In America we have the ability to create our own way and achieve any level we desire. We can not accomplish this by relying on the government to force employers to pay us more than we are worth. We accomplish this by making ourselves worth more than we are paid. Then, and only then, are we in a position to expect higher pay.
We, as consumers and workers, need to cast our votes in favor of free enterprise. It works EVERYWHERE it is tried. Our votes should reflect our desire that government remain neutral in our free enterprise economy. Our economy relies on businesses. They are the engine behind our economic success. When government hinders business from the bottom in the form of forced pay scales or from the top in form of taxation our economy suffers.
Tags: capitalism, free market, goverment, Minimum, wage
