Repeal all of the Minimum Wage Laws!!

I imagine that I'm going to get a laundry list of critics from what I'm about to say. In this blog, I intend to demonstrate, in ways that it has not been demonstrated before, why Minimum Wage Laws increase the cost of living, and are detrimental to any type of market-economy.


But before that, we have to look at some history. Minimum Wage made it's first real appearance in the state of Massachusetts in 1912 regulating the base amount of wages that an employer could give to women and children. Later on, Minimum Wages Laws were set nationally in the year 1938 which regulated the base amount that any employer could pay any given employee. Click here for more information regarding the history of the Minimum Wage Law.

Now, before you go any further, I'm going to provide a link that argues for the Minimum Wage Laws. Here is the link. Now, I'm going to quote this site and I'm going to debunk this nonsense step-by-step.

Quote from the website: "Everyone should have the opportunity to earn a decent wage. No American should be compelled to work at a rate that, assuming full-time labor, every weekday, all year long, amounts to the $10,712 that the current minimum wage provides. This is equally as true for a middle-class youth working to raise money for college as it is for a single mother supporting a family. The minimum wage is not just about helping the impoverished. It is about fairness, the value of work, and the opportunities that work provides."


If you take a close look at this paragraph, you'll see that it's built on emotional nonsense. The idea of fairness, the value of work, and the opportunities that work provides are completely nulled by the mechanics of the Minimum Wage policy. Labor is a heterogeneous commodity in the market-economy. When you set Minimum Wage regulations, businesses have to increase the cost of their products in order to make up the difference for the involuntary increase in employee salary, but they don't just mark up the cost of their goods and services to that point. Instead, they mark up past that point.


 Basically, they charge even more than they have to, because if Minimum Wage regulations are set, there is more money in the economy than there is supposed to be, and corporations rake in this extra profit by price gauging. So the entire purpose of the Minimum Wage defeats itself right off of the bat. 


Quote from the website: "Furthermore, no employer should be allowed to unreasonably profit by exploiting the lack of negotiating power of low-wage workers. The free market fails to set a fair price when one side holds all the bargaining chips. In another context, this is why laws exist against monopolies. If only one supplier supplies a good, it can charge more than the good is worth because the purchaser is powerless to obtain it elsewhere. Low-wage workers are in the opposite position of the monopolist. They lack the skills that command higher wages, but, because they need to work to survive, they cannot withhold their labor from the market. The monopolist can set the price at almost whatever level it wants, while the low-wage worker must take almost whatever is offered for his or her labor. Minimum wages exist for the same reason that laws against monopolies exist. They deal with situations in which the market fails to set fair prices."


It's worth mentioning that his website has a lot of charts and graphs supposedly proving his point, but it's the graphs he doesn't show that disprove his point. Usually, when sycophants of the minimum wage start spewing their nonsense, they show these little graphs that say things like, "Under the increased minimum wage policy, the average salary of workers went from $13,000 a year to $17,000 a year." Now that seems good at first glance, but the data they don't show tells the most. What is the average cost of living before and after the implication of the minimum wage regulations for the people making these wages? 


As I said earlier, the mechanics of minimum wage regulations defeats the purpose of the minimum wage regulations. When I asked what is the average cost of living before and after the minimum wage regulations for the people who make these wages, I asked that question with a very specific goal in mind. At bear minimum, the cost of living is going to go up just as much as wages for the people making these wages. And the cost of living doesn't just go up by that much for them, it goes up for everybody. So not only did you not help the poor, you hurt everyone else in the process. And that's assuming that the corporations are going to be honest and not use it as an excuse to price gauge. 


His statement that the free-market fails to set fair prices when one side holds all of the bargaining chips is utter nonsense because in a free-market society, no one side ever holds all of the bargaining chips. He once again fails to realize that labour is a market-commodity. If all of the corporations and firms held the same policy of screwing over their employees, then there would be no motivation to advance or to better yourself within the marketplace. 


Let's say that Company A is competing with Company B. Company B wants the labour that Company A has. How is Company B going to acquire that labour within the marketplace? Company B will have to somehow convince the workers of Company A that they would be better off working with Company B. They could do this a number of ways. They could offer higher salaries, or they could offer health benefits, or vacation benefits, or whatever. They have to have some type of gimmick in order to attract the labour. Company A loses some of it's labour to Company B and it realizes that it has to shape up or it will be in trouble, and it begins thinking of ways it can compete with Company B. The laborers benefit both ways, but Minimum Wage interferes with this process.


Did you get all of that? Good. NEXT!


Quote from the website: "But beyond the principle of valuing work and the economic rationale of correcting for market failures, the minimum wage provides a concrete benefit. Not surprisingly, low-wage workers tend to live in low-income households. Thus, raising the minimum wage provides income support to families in need. While it is important to understand that the minimum wage should not be judged solely on its efficiency at targeting low-income families, research shows that it performs well at doing just that."


Whether or not Minimum Wage targets low-income families efficiently is irrelevant to my rebuttal of this nonsense that I laid out within the first critique. 


Quote from the website: "Opponents of the minimum wage have made much of the fact that many low-wage workers do not live in low-income families. But a careful look at affected workers reveals that, for most of them, the earnings from their low-wage jobs are an important component of their families' incomes even if the families are not technically "poor." The fact that a higher minimum wage would also help some middle-income families is hardly a mark against it."


Do I really need to speak anymore? I mean, the guy is just repeating himself here essentially. 


What I find interesting is the fact that most people love the idea of higher Minimum Wages, but they oppose the idea of bailouts. Essentially, they are the same thing. The only difference is that in a bailout, the government is directly injecting artificial liquidity into the economy. The Minimum Wage works on the same principle, but instead of a direct injection, it's an indirect injection. Through Minimum Wage regulations, governments, through indirect means, inject artificial liquidity into the economy that shouldn't be there. This creates far more market instability than there is supposed to be, prices climb, and failures ensue.


Now I know some people will say, "Well, why don't we just lower the minimum wage instead of abolishing it?" Because, as long as the government is the one dictating minimum wage instead of the market, it doesn't matter what the rate is set at. The process above will continue to happen. 


The person I quoted basically said that we need minimum wage regulations to keep the suits from screwing over the little guy, but minimum wage doesn't prevent this, it enables it. The quicker we realize this, the quicker we can start to get the job situation under control.