By Dylan Tedford
The minimum wage is an important part of American business. Without the minimum wage evil business owners could pay their employees next to nothing and get away with it. We are the 99%. Sorry, I just realized how difficult it is to pick up on sarcasm when reading. I think the minimum wage is detrimental to many American businesses. I think business owners are seeking their own self-interests which generally benefit more people than just themselves. Finally, I think that the laws of markets cannot be manipulated without consequences.
While the minimum wage protects Americans from being underpaid it has also done two things to an equal or even greater extent. First of these two things is how the minimum wage has contributed to unemployment. If a workplace has twenty workers and is relatively efficient, what is the point of hiring more workers to lighten the workload on the rest of the employees? A business person would argue that hiring the extra people would increase productivity (because many hands make light work), increase workplace morale (because each job would be less demanding), and most importantly increase workplace competition (as only so many of the workers could earn promotions so there is heightened incentive to succeed). However, minimum wage laws have discouraged business owners from hiring those extra people because the jobs those people would be doing, in most cases, isn’t worth $7.25 an hour (or whatever minimum wage is in your state). Similar to point one it has diminished entry level employment opportunities for teens and young adults. It is much more difficult to get a job where a teen could learn job skills because most of the positions that used to be filled by teens-low-skill jobs- are now viewed as more of a luxury than a necessity for many businesses.
This leads to my second point. Is it a bad thing that business owners are primarily self-interested? I don’t think so. Business owners seek to maximize their profit so that their businesses can expand (employ more people, create more competitive products, and have more people buy those products) expansion leads to more expansion until demand is met, which is good for consumers and businesses alike. Essentially, the self-interest of business owners leads to a higher standard of living for the rest of us.
Having something like a minimum wage planned by the central government is problematic because many jobs aren’t worth that much, so the people who have minimum wage jobs are overpaid. The way to allow wages to equilibrate properly is by letting markets govern and adjust themselves. Markets determine how much a good is worth, so why can’t they determine how much a job is worth (Actually, they do, the government just turns a blind eye to the wage market’s deem fair because it isn’t “livable”). To quote a conversation I had last month with Mr. Randall Bolten, author of the book Painting With Numbers, “The laws of markets are as real as the laws of physics.” Thus, we can’t ignore gravity because the government claims gravity doesn’t exist. The same is true in economics, we can’t forget about the way prices, markets, and wages determine themselves just because the government says they can decide for us.