The Terrible Cost of Govt Minimum Wage Increases

This 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.

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Bob Ellis has been the owner of media company Dakota Voice, LLC since 2005. He is a 10-year U.S. Air Force veteran, a political reporter and commentator for the past decade, and has been involved in numerous election and public policy campaigns for over 20 years. He was a founding member and board member of the Tea Party groups Citizens for Liberty and the South Dakota Tea Party Alliance. He lives in Rapid City, South Dakota with his wife and two children.

Bob Ellis

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