Shannon Kelly
Perspectives Editor
The minimum wage is a left-over, rotting New Deal policy masked by “well-intended,” legislative yak; a policy accepted by people who do not understand its implications.
Fortunately, the past decade’s Republican reins repressed statist policies, but the recent elections handed power to a group of people far too accepting of the same kind of economic government intervention that caused the depression to last longer than it should have. The United States cannot afford an economic digression. It cannot afford to revisit “good ol’ days,” legislation — 40 percent joblessness, soup lines and giant government programs. Granted, the Great Depression II is unlikely, but before the Democrats get too comfortable, there are some serious economic issues to address.
Minimum wage increases are a likely proposal in the Democrat-controlled future. Unfortunately the paternalistic policy supporters are too caught up in the “it will help the poor” notion and too ignorant of its real societal and economic detriments. Supporting a minimum wage increase would be understandable if it actually created more jobs and helped the poor. However, it destroys entry-level jobs and hurts the poor. It is another misguided, failed attempt to relieve poverty that simultaneously ignores economic realities while undermining individual freedom (by far, the worst offense).
A higher minimum wage destroys entry-level jobs. The law of demand says when the price of something goes up, demand for it goes down. This economic principle (along with history) attests that minimum wage increases lead to fewer jobs not more. If the government forces employers to raise wages, it simultaneously forces the demand for workers down. Also, low skilled workers drown in the competition of the increased labor pool since inflated wages attract people with better skills who are now applying for jobs they would otherwise have refused. Employers will naturally hire those people over low-skilled workers. Poor, undereducated people who are unlikely to ever gain the job skills needed to compete with higher-skilled workers subsequently suffer under minimum-wage increases.
Essentially the government only “helps” people who need it least — young, well educated and probably collegebound people with no plans of staying in entry-level positions. But they will enjoy the government-backed wage hikes for the three months during the summer when they need that extra 20 bucks a week to buy beer and movie tickets.
The 20-year-old Abercrombie employee will gladly accept the benefits of minimum wage, but she probably will not recognize the governmental oversteps and threat to her individual freedom. The government’s job is to protect individuals’ rights. In this case, it must uphold freedom of contract by protecting an employer’s right to offer any salary he deems sensible, and it must protect workers’ rights to agree to any wage for which they are willing to work. Forcing wages on both parties robs them of their freedom. A forced wage increase is not only economic intervention, but it is the government intervening in individuals’ rights to choose what to do with their own lives.
The more that “well-intended” policies such as minimum wage increases are pushed, the more people ignore their rights and the more they excuse governmental abuses of freedom.
Understanding the limits of the federal government is vital to this country’s well being; its survival depends on an understanding of economic prosperity.
This is not difficult. Minimum wage laws are a type of price control. Take rent control as another example; when a price control is imposed, builders stop building more apartments because it makes no business sense to spend millions building an apartment structure only to have some paternalist progressive tell them how much (or how little) they can charge. The rent controls also say private business owners cannot raise their rents no matter how much their costs to run the building may increase over time. Price controls lead to shortages. Rent controls lead to fewer places to rent (try finding a place in Santa Monica or New York). And thus, they lead to higher costs. But, it was a good idea, with only the best intentions — idiocy.
Like rent control, price controls on wages will lead to, as economic law says it must always, fewer jobs. Fewer jobs are not a good thing for poor people. Fewer jobs do not lead to economic growth. Fewer jobs mean less tax revenue and so fewer government handouts for poor people. But statists do not worry about outcomes.
For paternalist Democrats, it is only their “good intentions” that matter. History warns against “good intentions.” Communism killed more than 100 million people in the 20th century proving that government control of the economy does not work. It can in fact lead to death, slavery, depravity and war. But despite all of the evidence against statism, Democrats will probably push for more government control of the economy.
Even if Americans do not mind the challenge to their freedom (which is inexcusable), at least they will never support a policy that destroys jobs and hurts the economy.
If citizens are aware of minimum wage’s pitfalls, the only way for politicians to push increases is by lying about its hypothetical benefits and cloaking their claims with “good intentions.” When Speaker of the House Nancy Pelosi D — Calif. demonstrates this calculated strategy, do not be duped.
Before you ask for things that come with only the best of intentions, stop to look at the long-term consequences of your desires. Let freedom be your guide, not good intentions.
11-06-2006