The Guest View , “Fix the minimum wage”, by Elizabeth Rose, published in Cityview on 9/6/2012, was emotionally appealing, but logically misguided. Wouldn’t it be nice if we could simply raise the minimum wage without any unseen negative effects.
What we see are those people who get and keep jobs at the new higher minimum wage. What we don’t see are those people who just don’t get jobs because they are not economically viable at the new higher wage. Some jobs are lost because customers will simply not pay higher prices, some are lost to automation because the new higher wage makes automation economical, and some are lost to offshore outsourcing. Typically, those with the least skill are the ones who can’t find jobs.
Many of the government laws and regulations regarding employment protect big, established businesses from competition by new, start-up competitors. Established businesses are often the ones who lobby for regulations that increase costs for would-be competitors. This is much the same as unions wanting government to require a high “prevailing wage” on construction contracts – to protect the union’s higher wages. These types of laws and regulations are primarily intended to protect existing vested interests.
As we continue to have downward pressure on wages and benefits because of international competition, it is possible that the cost of living will decline too. If wages dropped 10% but the cost of living dropped 15% what would be wrong with that? At the same time, our government is doing everything it can to increase the cost of housing (housing prices) – and then subsidizing those with low incomes. It would be better for those with low incomes if our government let housing prices fall to their natural level. Many cities don’t allow homeowners to take in borders – which could lower the cost for both the owner and the tenants.
Morally and philosophically, we should not allow our government to use its force to prohibit peaceful and honest people from voluntarily agreeing to employment terms. It would be considered immoral and illegal if you used force or fraud to make someone pay you a higher wage. The same thing done by a majority through government is still immoral. The purpose of government is not to create jobs. The proper role of government is to protect our lives, liberty and property against those who would use force or fraud to take those things from us.
And If you still feel that government and taxpayers must subsidize those who earn low wages, then the Earned Income Tax Credit, which already exists, is much better than an increase in the minimum wage.