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Minimum Wage Laws Don’t Work. Here’s Why

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A minimum wage seems to be a compassionate law requiring employers to pay low-income workers a wage necessary to meet a reasonable standard of living.

So should we have a minimum wage? And if so, what should it be?

The current minimum wage is $7.25, which merely acts as a floor price since most states have their own, higher minimum wages. The 2016 Democrat and Republican presidential nominees both support some sort of minimum wage. Hillary Clinton has advocated for a federal minimum wage of $12 per hour, while Donald Trump has been vague. In some instances, he has called on raising the minimum wage to $10, but in other cases, emphasizes that such policy should be left to the states.

A minimum wage is merely a price. That price is the cost of an hour of labor, a cost your employer must pay. This price can be viewed the same way as any other cost, such as an iPhone, computer, or new pair of shoes.

Like anything, price will be dictated by supply and demand. While you might pay $700 for the new iPhone, it is unlikely that you would pay $5,000 for the same phone. That’s the problem with minimum wage. The more something costs, the fewer people there are who will want to purchase that item (work). So when it comes to a minimum wage, the question becomes: at what cost will an employer decide not to “purchase” (i.e. hire) a new employee.

You may think then that an employer will only offer the lowest price (wages). But that’s certainly not true, either. In fact, if an employer has a high demand for workers in a certain industry, wages will rise. Conversely, when there is an abundance of workers, but too few jobs in another industry, then the wages will tend to fall.
The problem with minimum wages is that they act as a price control by setting a minimum price an employer can pay to hire a worker (hence, “minimum” wage).

This policy actually leads to more unemployment.

When minimum wage laws require a business to pay more than it can afford or is willing to pay, more people are out of work, and fewer businesses are willing to hire.

Even liberal California Governor Jerry Brown, who helped pass a $15 minimum wage, admits that minimum wages are economically harmful. In his own budget he wrote, “such an increase [in the minimum wage] would require deeper cuts to the budget and exacerbate the recession by raising businesses’ costs, resulting in more job losses.” Those are his words, not mine!

Liberals believe that those who oppose minimum wage laws are simply advocating for business. Yet, minimum wage laws are actually antithetical to the freedoms and rights of the workers!

Consider this. Minimum wage laws forbid workers – producers of goods or services – from working for less than what the government requires, or the minimum wage. That means that if the minimum wage was increased to $15, as California has proposed or Bernie Sanders wants nationally, you would be breaking the law if you were willing to be employed in the economy for less than $15 hour – or $31,000 a year.

Yes, that means it would be illegal for a worker to support themselves in a career that pays anything less, even $14 per hour. As I wrote in a previous post, this notion was perfectly summarized by the late economist Henry Hazlitt, when he wrote that limiting employment opportunities, “deprive[s] the man of the independence and self-respect that come from self-support.”

Minimum wages don’t hurt businesses nearly as much as they hurt the very people liberals want to support. Instead of allowing all people to engage in productivity, liberals want to make it illegal to do so unless you get paid a certain level of income. Most individuals would be willing to take a job that pays $14 an hour ($29,000 a year) rather than be unemployed. But unemployment is essentially what the law requires unless you get that extra $1 per hour.

Harvard economist Greg Mankiw ran the statistics on minimum wage and found that it most often impacts teenagers and low-income households. His analysis concluded that a 10 percent rise in the in minimum wage reduces teenage employment by one and three percent. Based on a $15 minimum wage, that would amount to more than 171,000 teenage jobs.

He also concludes that few adult workers have to worry about making minimum wage. His study shows that more than half of all minimum wage workers in the U.S. are under 25 years old – and about a quarter were between 16 and 19 years of age. Most important, only about 3 percent of those over the age of 25 years earn the minimum wage.

The minimum wage doesn’t work, and more often than not, leads to increased unemployment.

Really, it’s quite insane. (For more from the author of “Minimum Wage Laws Don’t Work. Here’s Why” please click HERE)

Follow Joe Miller on Twitter HERE and Facebook HERE.

Here’s Why Progressives’ Wage Pandering Is a Load of B.S.

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Fear of low wages seems to be a driving force behind many a government intervention in the market these days. All three major presidential candidates want to isolate the United States from international trade to allegedly protect American jobs and high wages. President Obama is extending overtime pay eligibility to millions of workers. The Left’s support for coercing workers into joining labor unions is supposedly about maintaining high wages. Minimum wage hikes are popping up all over the country. And the mythical gender wage gap remains a hot topic for misguided faux-feminists everywhere.

But if these Democratic politicians and pundits are really so concerned about wages, why do they do everything in their power to stifle the one factor that we know is tied directly to higher wages? Productivity.

When you get paid a wage, it’s because you’re able to produce something that others value. The more other people value it, or the more quickly you are able to produce it, the higher your wage can be. Professional actors don’t earn millions of dollars because what they do is particularly difficult or labor intensive, it’s because they are providing a service to a large number of viewers simultaneously, and those viewers are willing to pay to see them. Film actors make more than stage actors, simply because their audience is bigger. Their labor is more productive, meaning it provides more value to a greater number of people.

Because business owners don’t like to lose money, no one is going to voluntarily pay you more than the value of what you can produce. Otherwise, they could simply save money by firing you, and that’s what they would do.

This simple truth seems to have eluded many on the political Left who believe you can mandate wages irrespective of productivity. Instead of passing new laws and regulations on employers, anyone truly interested in promoting higher wages should be focused on making people more productive, so that they can earn more for doing the same amount of work.

How can we do that? There are a couple of ways. First, we can allow people to become more productive by increasing their skills and education. Unfortunately, the Obama administration has crushed the life out of primary and secondary education through policies like Common Core and an opposition to meaningful school choice.

And while the president would no doubt tout his support of “higher education for all” as a step towards increasing productivity, what he has in fact done is steered students away from technical and vocational schools, despite a widespread demand for jobs like welders, plumbers, and electricians. Due to the increasing scarcity of these skills, it is possible to make six figures with a two-year degree, but you’d never know it from listening to the elites trying to funnel more and more students into liberal arts colleges, where they will have to take out expensive student loans to earn a degree few employers value all that much.

Another way to improve productivity is to embrace technological advances. Yet, like Luddites terrified of change and advancement, we have seen progressives systematically try to destroy not only the opportunities for innovation, but even the new technologies that already exist. From the Internet sales tax, to the FDA dragging its feet on approving new medical devices, to increased regulations on Uber, Lyft, Airbnb, and other disruptive technologies, the government does everything it can to prevent improvements in the way of doing business.

This is bad for productivity. These innovations allow workers to produce more value with less effort, in less time, which in turn will allow them to earn more money. Instead of cracking down on these new technologies, we should get government out of the way and allow human invention to flourish.

So the next time a progressive tells you they’re concerned about low wages, don’t believe them. What they’re really concerned about is protecting the interests of certain groups — labor unions, green energy companies, well-connected incumbents — at the expense of everyone else. (For more from the author of “Here’s Why Progressives’ Wage Pandering Is a Load of B.S.” please click HERE)

Follow Joe Miller on Twitter HERE and Facebook HERE.

Wendy’s Announces Major Change in Response to $15 Minimum Wage

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The Wendy’s fast-food restaurant chain announced Thursday it will be including self-serving kiosks in its 6,000 plus locations by the end of this year.

The move comes in the wake of two of the nation’s most populous states, California and New York, passing $15 mandatory minimum wage laws.

Wendy’s president Todd Penegor reported that the chain’s company owned stores (making up 10 percent of the total) are seeing between a 5 to 6 percent increase in labor costs, driven by minimum wage hikes and the need to offer competitive wages to “access good labor,” according to Investor’s Business Daily.

According to the news outlet, McDonald’s has also been testing self-service kiosks.

Last year, Seattle became the first major city in the country to mandate a $15 minimum wage, which is being phased in over the next few years, as is the case in New York and California.

The new law appears to have already hit the Emerald City’s restaurant industry the hardest, due to the tight profit margins (around 4 percent) that are standard. Multiple restaurants have closed or changed their staffing or hours.

“Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut,” according to Fox News.

Anthony Anton, president and CEO of Washington Restaurant Association stated, “It’s not a political problem; it’s a math problem.”

Private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.

Fox Business Network’s Stuart Varney said of the $15 minimum wage on Fox and Friends Friday, “This is a failed policy. It is a destroying jobs, and it is hurting young people, in particular.”

According to the Heritage Foundation, over half of all minimum wage earners are between the ages of 16 and 24, and two-thirds of the employees who start at the minimum wage gain a pay raise within in a year. (For more from the author of “Wendy’s Announces Major Change in Response to $15 Minimum Wage” please click HERE)

Follow Joe Miller on Twitter HERE and Facebook HERE.

A Full-Time Minimum Wage Job Can’t Pay Rent for an Apartment Anywhere in the U.S.

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A new report from the National Low-income Housing Coalition has made a startling discovery, at least to anyone who has not tried to survive at a minimum wage job.

This map shows how many hours per week a person would have to work in order to rent a one-bedroom apartment without spending more than 30 percent of his or her take-home pay.

Photo Credit: National Low Income Housing Coalition

In the states with the lowest apartment cost, West Virginia, Arkansas, and Montana, a person would still have to work 54 hours per week to afford rent. In places like Washington D.C., Hawaii, or Maryland, a person would have to work more than 100 hours per week . . .

Photo Credit: National Low Income Housing Coalition

The report also showed that in expensive states, like Maryland or California, the renting wage can be exponentially higher than the current minimum wage. In California the minimum wage varies from $9.00-per-hour to more than $12-per-hour, but the renting wage is anywhere from $24- to $31-per-hour. (Read more from “A Full-Time Minimum Wage Job Can’t Pay Rent for an Apartment Anywhere in the U.S.” HERE)

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Democratic and GOP Governors Face Off in Washington Over Minimum Wage Hike

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Photo Credit: REUTERSPresident Obama and fellow Democrats are trying to use the annual Washington meeting of governors to rally support for increasing the federal minimum wage, as their Republican counterparts argue the idea is a jobs killer.

“I’m not for increasing the minimum wage because I’m concerned it would destroy jobs, especially for small business owners,” said Oklahoma GOP Gov. Mary Fallin, chairman of the National Governors Association. “The market will take care of itself.”

The annual winter meeting officially began Saturday morning, but both sides were jockeying for position earlier, as the Democrat-controlled Senate prepares to debate the Obama-backed plan to incrementally increase the federal wage from to $7.25 to $10.10 an hour by 2016.

On Friday, Obama met with Democratic governors at the White House to build momentum for his effort.

“This is not just good policy. It also happens to be good politics,” he said. “Because the truth of the matter is the overwhelming majority of Americans think that raising the minimum wage is a good idea.”

Read more this story HERE.

House Dems Plan To Use Rare Tactic to Try to Force Vote on Immigration, Minimum Wage

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House Democrats are vowing to try a rarely used tactic to force votes in the GOP-led chamber on the minimum wage and immigration reform, a strategy that will likely fail but might hurt Republicans with voters in this year’s elections.

The tactic is known as a “discharge petition.” It would require the minority party, in this case Democrats, to persuade roughly two dozen Republicans to defy their leadership and join Democrats in forcing a vote on setting the federal minimum wage at $10.10 an hour.

House Minority Leader Nancy Pelosi, D-Calif., said fellow chamber Democrats will push the issue when Congress returns from its break Feb. 24.

The attempt to force a vote on a comprehensive overhaul of immigration laws could occur in a few months.

Democrats think that a majority of Americans support both issues and that attempting to use the discharge petition will at least portray House Republicans as the obstacle to their success.

Restaurant Union Serving up Protests for Higher Wages

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Photo Credit: watchdog.orgThe Restaurant Opportunities Center, a union front and ACORN knockoff, is extending its reach by working with other groups to stage protests in 100 cities Thursday.

In a push for a higher minimum wage and more union members, ROC is also hiring a national campaign director to shepherd the center’s multimillion-dollar budget, partially plumped by taxpayer dollars.

Though registered with the Internal Revenue Service as a nonpartisan nonprofit, ROC is closely aligned with the Democratic Party and Big Labor, notably the Service Employees International Union and the AFL-CIO, said Mike Paranzino, spokesman for the group ROC Exposed.

With her insider credentials, ROC co-director Saru Jayaraman was at the White House in May to participate in an unannounced strategy session on raising the minimum wage.

Watchdog.org reported in August that ROC had a presence in a dozen cities. According to the center’s job posting, its new campaign director will supervise “22-23 local organizations around the country.”

Building on earlier protests at fast-food restaurants, ROC and its fellow travelers vow to mount demonstrations in 100 cities Thursday. Among the targets: Washington, D.C. and Boston, whose city councils are considering minimum wage hikes.

Read more from this story HERE.

Wage Strikes Planned at Fast-Food Outlets

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Photo Credit: Fabrizio Costantini for NYTSeeking to increase pressure on McDonald’s, Wendy’s and other fast-food restaurants, organizers of a movement demanding a $15-an-hour wage for fast-food workers say they will sponsor one-day strikes in 100 cities on Thursday and protest activities in 100 additional cities.

As the movement struggles to find pressure points in its quest for substantially higher wages for workers, organizers said strikes were planned for the first time in cities like Charleston, S.C.; Providence, R.I.; and Pittsburgh.

The protests have expanded greatly since November 2012, when 200 fast-food workers engaged in a one-day strike at more than 20 restaurants in New York City, the first such walkout in the history of the nation’s fast-food industry.

“There’s been pretty huge growth in one year,” said Kendall Fells, one of the movement’s main organizers. “People understand that a one-day strike is not going to get them there. They understand that this needs to continue to grow.”

The movement, which includes the groups Fast Food Forward and Fight for 15, is part of a growing union-backed effort by low-paid workers — including many Walmart workers and workers for federal contractors — that seeks to focus attention on what the groups say are inadequate wages.

Read more from this story HERE.