So the argument over minimum wage has for a while driven me nuts and I’m finally getting to discuss it. The first thing we need to do is figure what exactly minimum wage is suppose to accomplish. To me, this mandatory minimum wage is very unneeded in today’s world and I say this because there is a very small percentage of the workforce who is making minimum wage. According to a study done by the Pew Research Center and published in September of 2014, only about 4.3% of the workforce makes minimum wage or below (there are certain industries/jobs where the employer is allowed to pay their employees less than minimum wage). To me, the intent of a minimum wage would be to insure that the employer is paying a fair amount because companies have the perceived reputation of paying as little as possible. However, when such a small portion of workers are making minimum wage or less, you have to wonder about this so-called reputation. If a company has no legal obligation to pay more than this, why do they? Simply put, it’s called the free market! If a company is not paying enough to keep people working for them, that company will go out of business, simple as that. Not to mention, what if I want to start a business and I don’t have the money to pay people minimum wage but people believe in what I’m doing and are willing to take less pay for the greater cause? Shouldn’t it be up to the employees to make that call? I know personally if I had a good feeling about a new company just getting on their feet, I would have no problem taking less pay if I was financially able to. But again, that would be something that I would have to determine and decide for myself.
We’ve seen how unecessary a minimum wage is, but let’s pretend we are ignorant and we think we need somebody to protect us from our employer by requiring them to pay us at least a minimum wage. The next question is, who exactly needs protected? You might jump to the answer that I did, the people who are making minimum wage but this is not only group of workers to be impacted. There has been talks about making the federal minimum wage $15/hour so let’s use this number for our discussion here. Now remember, minimum wage means the employer has to pay EACH of their workers AT LEAST this much. This would mean that everybody who makes less than $15/hour would jump up in pay automatically, but what would they jump up to? The current federal minimum wage is $7.25/hour, so let’s for simplicity just say they want to double that. Before they raise it to $15, let’s say John makes $10/hour, how much is he going to expect to make once the minimum wage is doubled?
Is he going to expect to make $20/hour? It wouldn’t be fair if he only went up to $15/hour when new hires are now starting out at that. So the company is going to have to raise wages for all its workers and the question would be whether the company could afford to do that.
Proponents of this movement would say that if everyone has more money, they will buy more which means businesses would have more in order to pay the higher wages. While this might be a tiny bit true, the problem then comes when the company has to figure out how much a certain product is going to cost in order for them to stay in business. With doubling everyone’s wages, what do you think happens to the company’s expenditures? They are going to go up, A LOT! This in turn means they are going to have to charge more for products, so the customer has to spend more of their increased wage to buy what they need, which then means the customer can’t buy more than they use to before the raise. Wasn’t the idea of a higher minimum wage to help those people who couldn’t buy enough, buy more? Just another reason a minimum wage is irrelevant, you make more money but spend more for the same necessities.
When you see something about somebody wanting to raise minimum wage or you see that other countries have higher minimum wages than we do, think about what exactly that means. Think about what money means to you. To me, money is a way to get necessities, and maybe some luxuries. So how much money is considered to be a lot is really determined by the cost of goods. If making minimum wage high fixed financial problems, why not make it $100/hour? If we did, you would have a $10 value menu instead of a $1 value menu. It’s pretty much a cat chasing its tail situation.