Minimum Wage

January 5, 2007

As soon as Congress convenes this new year--2007, one of its first stated priorities is to pass a hefty $2.10 increase in the minimum wage--from $5.15 to $7.25 per hour--by 2009. Senator Edward Kennedy (D-Mass) will re-introduce his "Fair Minimum Wage Act," which failed last year, to the Senate. Representative George Miller (D-Calif) will introduce a similar bill in the House. Representative Nancy Pelosi (D-Calif) has promised to get it going during the first 100 hours. Both houses are expected to pass it. In addition, President George "Dubya" Bush is intent on signing it. He has already said so on numerous news broadcasts.

What are our so-called "leaders" thinking? What is going through the minds of these people? Do they really think they are helping anybody? Is it going to help workers on the bottom of the socio-economic ladder pull themselves up to a higher level?

The great American traitor, Franklin D. Roosevelt, is the one we can blame for starting an artificial wage in our country. He first tried it in 1933, during his first year in office. Fortunately, the Supreme Court soon struck it down. But in 1938, he and Congress managed to push it through. Since then, it has mushroomed from a modest twenty five cents an hour to the current $5.15.

How does a minimum wage help America's economy? Who could possibly benefit from depriving employers and employees of their right to decide among themselves what wages they should earn? The answer is absolutely nobody. There are no benefits whatsoever. Regardless of one's income level, he will not get a raise. A genuine raise has to be earned--not coerced.

But bumping up artificial wages have costs--heavy costs:

1. They force the prices of practically everything upward, usually more than the mandated increase the employees get.

2. The higher labor costs and prices make American products less competitive on world markets, thus increasing our trade deficit.

3. These same costs accelerate the movement of American manufacturers to other countries where labor is cheaper.

4. A few employees who are earning the current minimum will get the forced increase, but many others, being unable to increase their production proportionally, will lose their jobs.

5. Some companies that are operating on the edge of solvency will be unable to absorb the extra costs and will be forced to close. All of their employees will lose their jobs.

6. Unemployment will rise. As a result, people who have been earning their own livings will be forced to accept government handouts to survive.

7. Wages will go up with no increase in buying power. But we will be forced into higher income tax brackets.

8. And yes, the hassles of government enforcement agents sticking their noses into private businesses have their costs--both in money and harassment.

Minimum wage laws can even be racist. As an example from the very beginning in 1933, according to the Mackinac Center for Public Policy, FDR's little scheme caused 500,000 low-skilled black people to lose their jobs. Nobel Prize-winning economist Milton Friedman said the minimum wage was an adverse "anti-negro law." In apartheid South Africa, unions pushed for minimum wages so low-skilled black workers could not compete for jobs with their only trump card--willingness to work for lower wages.

Right now unemployment is at a near record low. This is largely due to enough inflation since 1997, when the minimum wage was pegged at $5.15, to bring the number of people earning the lowest wages down to a small minority. In other words, the minimum wage is now low enough to where its impact is not very great.

As soon as an increase takes place, unemployment rises, productivity diminishes, and dependency on government rises. Fewer people can support themselves and more are enslaved by the government. What kind of do-gooder does it take to want that?

Do you want to be a slave to the government? Or do you want to cast off your chains?

To be really free, we must have a free market, not artificial wages, prices, or any other impositions from government.


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John Martin's picture
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John Martin is a libertarian writer from Alabama.