Another Point of View on the Minimum Wage

This week’s blog is “on loan” to a long-time friend of mine who, unlike the sensible conservative (see blog dated Jan. 12, 2014  ), has a favorable view of  raising the minimum wage.  He fashions himself the California Capitalist and, from that perspective, takes a “realistic” approach.  Read on.  [I will respond next week.] 

The minimum wage debate is almost always waged on moral grounds – whether unskilled, untrained, maybe not very smart people “deserve” to be paid more.  That’s completely the wrong way to look at it.

First off, minimum wage jobs are NOT mostly held by kids who don’t need a living wage.  Seventy-eight percent of people earning the minimum wage are over twenty-four years of age.  The average age of people earning the minimum is approximately thirty-five years.   Three and a half million people receive the minimum wage plus ten million people are entirely unemployed which means that thirteen and a half million people or about 8.65%  of the workforce and about 5.6% of the adult population are earning a take-home pay of $1000 a month or less.

There are always people who are not very smart, not skilled, not determined, and not talented.  You can’t kill them.  You can’t ship them off to a desert island, and you can’t just ignore them in the hope that they will quietly disappear without causing you any trouble.  All benign neglect gets you is a massive welfare system, gangs, drugs, and lots of expensive  policemen and prisons, like we have today.

Your real choice is either to:  (1) deal with these people through a welfare bureaucracy, police and prisons, all funded by your taxes or (2) have jobs available that pay unskilled, untrained, not very smart people enough to live on without welfare.

Looked at another way, your choice is either to:  (1) have these people employed, paying taxes, with a stake in the success of your society or  (2) have them unemployed, getting welfare from a government bureaucracy, sitting around, getting into trouble, having kids who also get into trouble, alienated from you society, and highly susceptible to falling into gangs and drugs and crime.

The city doesn’t employ garbage men in order to be nice to them.  It does it to stop rats and disease.  You want to have everyone, even unskilled people, even stupid people, have a job that will pay them a living wage, not to be nice to them but because it’s better for you.

I would argue that the minimum wage should be set at $10.00 per hour for people under eighteen, $13.00 per hour for people between eighteen and twenty-four and $16.00 per hour for people twenty-four and over and that it should be tied to inflation.

An increase in unskilled wages will be reflected in the price of the products produced by minimum wage employees.  Capitalist principals say that the price of a product reflects the resources needed to produce it and, through competition, the market then chooses which products succeed.

Yes, we may have to pay a $1.25 for a McDonald’s hamburger instead of $.99 just like we have to pay to have our garbage picked up and for the fire insurance on our houses.  They’re all costs of doing business.  Dealing with the existence of unemployed, unskilled people is one of those costs.  You’re going to have to pay one way or the other.  It is a cost that won’t go away no matter how much you wish it would. 

The question is:  Do you want to pay for it with taxes, cops and welfare or by paying a few pennies ore for a Big Mac?