Thursday, August 25, 2016

Minimum Wage

You hear constantly about how the minimum wage is a tool that prevents slavery, promotes good treatment of workers, and protects the low skilled worker.

But does it?

I will attempt to disprove all three of these claims, and show how the minimum wage does not help, but instead hinders. I'll begin with the claim that MW prevents slavery.

One thing to remember about a free market is that there should be no coercion or force involved in that trade. If a trade is forced, it is not a good trade. It can be seen to be the equivalent of someone pointing a gun to a person's head and asking for him to "trade" his money with him. We can easily see that this cannot be treated like a trade, instead, it is stealing. For a brief moment, he has made the man he is pointing the gun at his slave, and that man must comply with anything the gunned man orders him, at the price of death.

Now, let us compare this to the MW. The MW, as you all know, sets a minimum price on a person's labor. It makes it illegal for that worker to try and find a job that pays less than that amount, and it makes it illegal for a business to bargain with their workers underneath that amount. That means even if that job is not worth the minimum wage, neither the business or the worker can sell or buy labor at it's market price. We can see the man with the gun again, but this time, it's the Government.

The second argument for the MW is that it promotes good treatment of workers. But, once again, this is far from the truth.

It can be agreed that good treatment of workers occurs when they are employed by a business that values them. After all, if a business does not value their workers, they will not give attention to their workers. To make this more clear, I'll use a simple analogy.

Let's say that you are buying some wheat. If you buy it at a good price, you would value that wheat. You wouldn't throw away that wheat if you bought it at a low price, because that was a good deal that you got it at. It would be more expensive for you to buy more wheat if your wheat got rotten, so you would take precautions not to let it rot.

In the same way, if a business is able to buy labor at a good price, the business would value that worker. The business would not want to risk loosing that worker, because if the business was able to trade labor at a very good price, it would be much more expensive to hire new workers. Therefore, if business hires a worker at a good market price, they would value that worker over the ones asking for more.

But, the MW changes the entire scene in front of us. Now, workers are all asking for the same amount of money because they are forced to by the Government. This makes workers replaceable, dispensable. If a worker misses their quota, the business can simply fire that worker and hire another one, without thinking twice. Thus, the MW does not promote good treatment of workers, instead, it takes away their value and makes them disposable.

Finally (this is a long post, so bear with me), it is argued that MW protects the low skilled worker. But this claim, like the others, can be dismissed.

One must simply look at what the MW does. It forces everyone, regardless of their skill level, to ask for the same amount of money for a certain job. This is a no brainier: would you rather have a skilled worker working for you, or a unskilled, uneducated worker working for you? They are both asking for the same wage.

That should be easy: any business would choose the skilled worker over the unskilled, uneducated worker. Thus, it is easy to see that the MW does not protect low skilled workers, but instead, out prices them out of the labor market.

For these reasons, the MW is not a tool that prevents slavery, promotes good treatment of workers, and protects the low skilled worker. Instead, when we break down its implications, we see it is a tool of force used by the Government, a tool that makes workers disposable, and a tool that out prices low skilled workers out of the market.

Questions or comments?

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