Table of Contents
What is minimum wage?
The minimum wage is the lowest hourly wage rate that employers are legally required to pay their employees. It is set by government regulations and is intended to establish a minimum standard of living for workers, ensuring that they receive a fair and reasonable wage for their labor.
Federal
According to the US Department of Labor, the federal minimum wage for covered nonexempt employees is $7.25 per hour.
State Level
Some states and localities have their own minimum wage rates that are higher than the federal level to reflect the cost of living and economic conditions in those areas.
Should the Minimum Wage Be Increased?
Agents of the state will have you believe the minimum wage is designed to help less fortunate people. However, it ends up hurting small businesses, consumers and the marginalized communities it claims to help due to the unintended consequences of layoffs, reduction in hours/benefits and increased prices.
History
The United States passed the first minimum wage law in 1912 to address the exploitation of the less preferred workers at the time: women and children.
Labor unions played a significant role in advocating for workers’ rights and better working conditions during the sixties in the US to prevent competition with other workers that were willing to work for less.
Who is actually getting hurt with Minimum Wage?
- Marginalized communities and less preferred people.
- Small businesses
- Consumers
What are the unintended consequences of a Minimum Wage?
1. Less Jobs: Increased Unemployment
Reduced Employment of Unskilled or Low-Skilled Workers
While it may sound nice, forcing employers and job creators to pay their employees a set wage regardless of their skills. What this actually leads to is discriminatory hiring practices based on skill level, race, culture, age and other preferences and inclinations.
2. Reduced Hours and Benefits
Reducing employee hours can lead to a decrease in labor costs, helping businesses stay afloat.
3. Eliminating Full-Time Employees
How business leaders choose to compensate for having to over pay unskilled workers results in cutting hours and choosing to avoid paying benefits if they have less full time employees.
4. Hurting Small Businesses
This law hurts small business owners. Big businesses can invest in automation technology and are much better equipped to pivot during economic hardships.
This can have a disproportionate impact on low-income individuals, which defeats the whole purpose of why higher wages were mandated.
5. Reducing the Cost of Discrimination
When employers are forced to pay a set wage regardless of skills, this reduces the cost of discrimination gap between skilled and unskilled workers. Unskilled workers lose the best selling point: working for cheaper wage. Thus reducing the likelihood of competing against higher skilled and more preferred workers.
6. Increased Prices
Due to the government imposed wage controls it ultimately hurts the consumers. Businesses have to make up for changes in their cost structure by increasing the price of the product or service.
Free Market Wages
Employers and employees should be allowed to freely exchange and make an agreement without big brother interfering and causing more problems than it solves.
In a truly free market, employers and employees have the freedom to negotiate and come to mutually beneficial agreements without unnecessary government interference. Allowing market forces to determine wages fosters healthy competition, leading to advancements and innovations that drive down prices and improve the quality of goods and services, ultimately bolstering the overall standard of living.
Moreover, a free market enables workers, especially young individuals in low-income situations, to acquire valuable life skills early on, enhancing their prospects for the future. By embracing market-driven labor dynamics, we pave the way for improved working conditions and better outcomes across the board. Let us champion the principles of a free market society, where the dynamic interplay of supply and demand for labor propels us towards greater prosperity and individual empowerment.