The Terrible Cost of Govt Minimum Wage Increases

California_minimum_wageThis video from Heritage shows the human (and economic) cost of government-mandated minimum wage increase laws.

The government doesn’t just wave a wand and new, free money appears out of the sky to give to people. Somebody has to pay for that. It gets paid for by the business owners who put their own property on the line to create and run that business (and usually work harder than any line worker to keep that business going), and it gets paid for by the consumer.  No, the government can’t manufacture “free money” for you.

But examine the cost, for a moment, of this government-mandated, forced increase in the cost of labor.

Yes, you as a business owner can pass along a great deal of that increased operating cost to the customer (wonderful for us customers, eh–we get to pay MORE for goods and services, which eats up what we just got from our “minimum wage increase). But when your business is the type of business that many people can or will do without when the price of it goes up, that means you lose business…which means (if you can’t freeze or lower wages or benefits, or find some other way to shave off operating expenses, which are probably already cut lean), you have to FIRE people.

So yeah, you might get a wage increase for a while…until business declines…and then you get to lose your job. Great deal the government engineered for you, huh?

And for those teenagers who would like a part-time or summer job to make some money, or a young person who wants a job to help pay for college?  Sorry, the cost of your labor is now too high, thanks to government meddling, and the business owner can’t afford to hire you at a lower wage (where you could both gain from the relationship), so you just don’t get hired.  Goodbye teen jobs and college jobs. Thanks, government.

And as I have already alluded to, minimum wage increases make the cost of goods and services go up across the board in society. So you get a bump in your pay…and you get a bump in the cost of the goods and services you purchase.  So the increase you got, gets eaten up by the higher cost of things you buy.  In the end, you end up with nothing more…except some people lose their jobs, and some businesses go out of business.  Government meddling is really nice, huh?

Of course, these are only the practical implications of government meddling with the property rights of free market businesses. Philosophically (which is of critical importance, despite the obtuse ignorance of so many people these days), it is wrong for government to tell a private business owner how to run or what do do with his own business.

If a worker doesn’t like the compensation an employer is willing to pay for their labor, in a free country, they are free to market their labor to another employer in the hopes that employer might pay them more for their labor. If indeed their labor is actually worth more, an employer might pay more for it. If it isn’t worth more, in a free society, the employer won’t pay more for it.

The laborer is free to accept a mutually beneficial arrangement with a business, or decline a relationship with that business. Likewise, in a free society and a free market, a business is free to accept a relationship with a laborer under mutually agreeable terms, or is free to decline that relationship.

That’s how it works in a free nation–like America once was, before our infatuation with socialism and intrusive government.

There is no moral justification for government to force a business to pay more for a commodity than that business wants to pay. How would you like it if you wanted to pay $10 for an item, and the seller was willing to sell you that item for $10, but the government said “NO! You MUST pay $15 for that item.” Would you consider that a moral action on the part of the government? Then why would any rational person consider it moral for the government to force a privately owned business to pay more for labor?

The two people involved in the labor transaction–the laborer selling their labor, and the business owner purchasing the labor–are in the best and only reasonable position to determine the true worth of that commodity, not government.

Let’s end this infatuation with socialism and unlimited government power, and return to the model of limited government and freedom that made this nation the greatest in history in the first place.

5 Comments

  1. Thisoldspouse says:

    I still remember the leftist rants of a liberal co-worker who, when discussing healthcare “reform,” said “just give it to them!”, as if unlimited healthcare could just be doled out willy-nilly with no cost to anyone. What abject idiocy.

  2. Martina says:

    can I point out something, the sad part is that Businesses in the Black Hills(we came last year to enjoy this amazing place) and in WI (in WI a business has someone fly to Poland to hire young adult/teen summer workers) and probably other places too. Hire young people from other countries, because they work for less. I was so upset about it I told the man I was talking to, that I have teens that need jobs and they would not mind working for less either. But I guess our teens and college age students are doomed. First they take companies out of the USA to save money and now they bring in cheap labor to save money but the people needing jobs can’t get them.

    • Bob Ellis says:

      Too often, Americans think they’re too good to do certain kinds of work, or too good to work for less than X wages.

      And few people would even think of marketing their labor to a prospective employer (i.e. I’ll learn fast, work hard, come in early, stay late, etc.).

      Sadly, the business you mentioned probably got better quality labor from Polish youth than they would from spoiled American youth.

      • Martina says:

        I agree. I know you are right because I worked for a season at an apple orchard and those young woman did not know how to work, be on time, or be faithful in coming. But I know also a lot of young people (at least among our homeschool community) who are eager to work and give it their best. Here is another point. I had worked on a cruise ship before and for us European (Germany, Swiss and Austrian) cabin stewardesses, the tips we earned and the little pay we received was nothing compare to what we earned at home. So it was just being there for the experience and enjoying some beautiful Islands. However for those from India, Nicaragua, Philippines and even Poland, for them what they earned was great. Basically we earned the same money but the value of our earnings did not buy us much in Germany etc. but for the other workers from these other countries what they made bought them a lot more. That is a factor too. If my son earns 5$ an hour and has to pay for taxes, a car, gas, etc. well 5$ here in the US does not get you much but a kid from Russia if they have free housing and live by the workplace if they earn 5$ and do nothing but work for several month and don’t have many expenses, well they are able to buy all kinds of things when they get home. Here is one not spoiled American youth and I know others like him. My son worked at a organic cornfield for one summer than worked for a landscaper. Was able to move to our friends where he could stay worked for a year to save money for college ( friends got him a job, we live among cornfields and jobs are harder to find or further away) is now attending BJU and working while he studies. He will come home in May and is looking for a summer job. With college being expensive and paying taxes and the value the money has here, he does have to earn a certain amount. Where foreign students may not need to earn as much money as he does to meet the same goal.