Raising minimum wage increases cost of hiring
Saturday, December 21, 2013
Beth Cody, Writers’ Group member
Iowa City Press-Citizen

 

President Obama is pushing legislation that would raise the federal minimum wage to $10.10 by 2015. The top 10 reasons why this will hurt the poor and everyone else:

1. The arguments that raising the minimum wage will lead to no ill effects defy common sense, which tells us that when something costs more, people will try to use less of it. Some people may believe that “employers will still have to have workers,” but they don’t have to have as many of them, or give them as many hours, or hire the additional worker (requiring existing workers to work harder instead).

  1. 2. Some minimum wage jobs could easily be replaced with technology, which will happen if wages rise so quickly. Fast food restaurants, for example, will undoubtedly soon start testing customer ordering kiosks, eliminating the need for several workers at each location, just as Walmart is steadily improving self-checkout lanes.

  2. 3.One argument is that everyone is “worth” more than $7.25 per hour, but sadly, there really are some people who are not worth paying that much: they haven’t learned yet how to show up for work or how to behave in an “employable” way. At higher wages, employers are not willing to take a risk to hire and train them, although they might be willing to do so at lower wages. So those people remain unemployed, with no way to climb the first rung of the ladder.


4. If minimum wage jobs pay more than $10 per hour, more people will apply for them and the productive will be hired over inexperienced applicants, making it even harder to start climbing the ladder. And overall wage inflation will eventually occur as more productive workers demand even higher wages, which will cause even more price inflation.

  1. 5. Most minimum wage jobs are in retail and service, and when employers are required to raise prices at places like Walmart and McDonalds, the higher cost of living will directly hurt the poor the most.

  2. 6. How can the federal government possibly know what the “right” wage is for every city, state and worker? Some might be willing to work for $7.25 in a low-cost city, while others might be struggling to eat in expensive cities. Markets should set prices – including the price of labor.

  3. 7. Often, arguments for a higher minimum wage center on income inequality. But libertarians believe that government is making income inequality worse, not better. Corporate subsidies and regulations that benefit favored businesses and make our cost of living higher are manifestly unfair. And intellectual property laws are one of the primary contributors to income inequality.

  1. 8. Lower taxes and regulations would allow businesses to pay employees more. Economic growth greatly benefits the poor, because allowing people to keep more of their earnings leads to more investment in businesses that will compete to hire people at higher wages as our economy grows. Competition forces employers to pay higher wages to good employees, or to settle for inexperienced workers who benefit from the training and experience they gain as they become more productive.

  2. 9. From a philosophical standpoint, why do bureaucrats and politicians (or anyone else) get to decide what an employer pays employees? It’s far too easy to be generous with other people’s money, and those wages do come from other people: from customers’ pockets through higher prices, from the family earnings of small family businesses with only one or two employees, from those made unemployable by such laws, and from taxpayers who must support the newly unemployable.


  3. 10. There are better government programs to help the poor: A higher Earned Income Tax Credit would far more effectively target the poor without subsidizing middle-class teenagers still living at home, or raising unemployment or hurting small businesses.

  4. It’s simple: in a time of high unemployment, the worst thing government can do to workers is to increase the cost of hiring.