the LYNCH report

The Power of Clear Insight

Why Eliminating the Minimum Wage is the Only Fair Thing To Do…

with 3 comments

Should the minimum wage be raised, lowered or abolished? Make your choice in the Comments section at the end of the story.

There’s been some talk here in BC about raising the minimum wage to $10/hr from the current $8/hr. That’s an easy idea to get behind, isn’t it? We all want our fellow humans to make a decent living and enjoy a reasonable minimum standard of living, and that’s exactly what minimum wage permits. Or does it? Is it, in fact, fair and just to demand the poorest and least skilled in society charge at least a fixed minimum price for their labour?

Imagine this scenario: you own a pizza parlour and notice the windows could use a good cleaning. Outside there sits a homeless person. You offer the homeless person $5/hr to clean the windows. The homeless guy is delighted to get a chance to get a few bucks in his pocket, you’re thrilled your windows will get cleaned, and you quickly reach agreement. Under minimum wage laws, notwithstanding you are both consenting adults, you have made a deal which is illegal. So what are we left with? The windows of your pizza parlour remain dirty, the homeless guy remains broke, and someone somewhere who makes multiples of the minimum wage pats himself/herself on the back for their caring in helping prevent such inhumane cruelty.

But, you say, why doesn’t the pizza owner simply pay the guy the minimum wage? Unfortunately, there’s the little matter of scarcity: the existence of the minimum wage does not magically make more money appear appear in the pizza parlour owner’s pocket.

Take another example: the owner of a restaurant. He has a staff of 10, whom he pays $8/hr. Each staff member works 40 hrs/week, so the payroll is $8/hr X 40 hrs/week X 10 employees = $3,200/week. Now imagine the minimum wage rises to $10/hr. The owner of the restaurant now faces a payroll of $4,000/week – that’s right, a 25% increase. But where does this extra money come from? Sales don’t increase magically (where would you get the money if, say, your rent or mortgage went up by 25% arbitrarily?). In order to continue making ends meet and operating a viable restaurant business, the owner keeps the overall payroll the same, at $3,200/week. To make that work, he has to let 2 staff members go. Who, exactly, wins in this scenario? The restaurant owner is now paying the same payroll for less labour in return. The remaining 8 staff members are now valiantly trying to do the work of the missing 2 staffers. And those 2 former staffers are now unemployed. Suddenly it’s getting harder and harder to find a winner here.

One final thought: minimum wage laws are particularly unfair to the poorest and least skilled in a society. People have a variety of skill sets which, left to market forces, can be sold at varying amounts. Some people can sell their skills for many times the minimum wage, however another small group of people only have a skill set worth less than the minimum wage. In other words, given a free market, some people would only be able to find work for, say, $4/hr. Minimum wage laws make it illegal for such a person to freely agree to sell his or her labour for $4/hr. What’s wrong with that, you might say: the minimum wage laws will ensure such a person gets at least $8/hr – surely that’s a mighty noble notion! Well, the problem is the person with the $4/hr skill set is now forced into a position whereby he/she is competing for an $8/hr job against people who have skill sets worth $5/hr, $8/hr and all points in between. An employer, as a rational individual, will always seek to get the best bang for his/her payroll buck (in the same way you wouldn’t voluntarily pay MORE for an inferior product, ms windows notwithstanding…), so facing a situation whereby applicants range in skill sets from $4/hr to $8/hr, the applicant with the $8/hr skill set will always stand a much better chance of landing any $8/hr job than the person with the $4/hr skill set (or the person trying to find his or her first job). So where does that leave the person with a $4/hr skill set? Very likely dependent upon the state to provide for him/her. Again, who wins?

This is the worst kind of unfairness, in that it’s clothed in the language and appearance of “caring” and “empathy” and “doing the right thing for those less fortunate” – noble ideas, all of them – when in fact, it does anything but. Instead, it turns the least skilled into beggars and welfare recipients while simultaneously undermining any sense of pride they might get from being able to provide for themselves. It’s high time we ended this unfair attack on the poorest members of our society and begin treating them as independent, capable adults.

Written by westcoastsuccess

March 22, 2008 at 7:07 pm

3 Responses

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  1. I wholeheartedly agree with your views on minimum wage. If we abolish this crazy notion that employers MUST pay a certain amount to employees (who probably are not worth half the federal minimum wage) then we’d all be better off. Teens might actually stay in school and learn something instead of flocking out to get a job flipping burgers and making the “Big Bucks.”

    JakeStrickland

    December 8, 2009 at 6:34 am

  2. I totally agree. The government shouldn’t have any choice in how much a person is allowed to make. We should let businesses choose how much you are actually worth. You’re usually not worth much anyway. I mean, there are plenty of other people like you out there. It would just make business so much more efficient.

    I’m sorry, I just feel bad for places like Target and Best Buy. The higher ups really work too hard to be fucked over by the people that they serve.

    Jeremy Casualle Tallker

    May 21, 2010 at 12:05 pm

  3. Except for the fact that corporations like Catalent Pharma-Solutions have been lowering their employee wages to keep up with market demands for labor while reporting record profits for the last five years. You eliminate the minimum wages & companies like this will turn into sweat shops.

    lacerta1972

    November 1, 2011 at 6:19 pm


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