Since the minimum wage discussion is coming up on the big radio show this morning during the first half hour, I thought it would be appropriate to refer back to a few previous posts.
The American people are being sold a bill of goods – lied to – concerning the effects of a minimum wage. Federal and state minimum wage mandates do nothing to help provide a “living wage” nor does it do anything to improve the overall employment picture. Walter E. Williams’ column today discusses how this government interference ensures about one in four minority youths are unemployed.
When the government mandates you pay employees a wage that is more than what a free market would determine, businesses have decisions to make. They can…
- Increase prices
- Cut expenses (reduced quality/service, cut employee hours, reduce benefits, layoffs…)
- Accept a lower profit margin, or
- Some combination of 1, 2 and 3.
For a small business with thin profit margins, these are very difficult decisions to make. If you are a small business employer who happens to be part of the group of 25 percent who are underwater in their home mortgage, you’re not going to be able to easily take a pay cut.
Can you increase prices? Sure … but what will the market pay? Unlike the government mandating what you must pay employees, the government does not mandate private individuals buy a product or service from you (yet).
Will you elect to work more hours and not hire those extra seasonal employees this summer? Well, that’s exactly what’s happening, and there is a staggering discriminatory effect in play.
More from the RVO archives on the minimum wage all the way back to the summer of 2008.
You can click here to list all of the posts including the ‘minimum wage’ phrase, or click on the links below to take you directly to the posts.
- Confirmed? Raising minimum wage increases unemployment (Aug. 2008)
- Raising the minimum wage making things worse (Dec. 2008)
- Is the minimum wage increase helping? (Sept. 2009)
- The economics of the minimum wage (March 2010)
- Uncle Sam decides to help Samoa (June 2010)