Feel good policies like a national minimum wage are almost always misguided. They sound so good, so loving and caring, and well intentioned. After all, shouldn’t everyone make a living wage? But the unintended consequences of these feel good policies are rarely considered. Here are my top 5 reasons why a national minimum wage is a bad idea:
A high minimum wage is a job killer. It eliminates entry level jobs which hurts the economically disadvantaged and minority communities. These jobs are the starting point for many young workers, allowing them to learn and mature and start a career. President Reagan once said “the best social program is a job”. I agree. I probably learned more life lessons at my first job than I did in high school. Far too many young people are priced out of that first job because of a high minimum wage.
Covid-19. Food and service industries are suffering most from the lockdowns. The CBO estimates that imposing a national $15 minimum wage would cost 1.3 million jobs. Many restaurants in big cities will never reopen. One study found that 1 in 3 tipped workers would lose their job. Now is not the time to impose more government mandates on small business.
One size doesn’t fit all. Wages vary by profession, skill, location, business needs and the availability of qualified staff. You can’t just mandate a National, or even a State level minimum wage and expect it to work. Location matters. Cost of living matters. What makes sense for New York City doesn’t work in Beaufort.
The Living Wage canard. According to Joe Carter of the Acton Institute, “The goal should not be to merely give people a living wage but to help them gain the ability to make a life for themselves based on the value of their labor. What the working poor need most is marketable skills and productive jobs, not more handouts disguised as wages“. If we kill entry level jobs, how will unskilled workers learn skills needed to advance?
Economic freedom still matters. Business owners and employers should be free to price products and set wages without government mandates. How can the government in Washington possibly know how much to pay someone in Beaufort? Only the business owner has all the information needed to make that choice. If you don’t pay someone enough you risk losing them to a competitor. Keep losing employees and you will soon be out of business. But if you are forced to overpay an employee, you just cut staff or reduce hours. Rev. Gerald Zandstra of the Acton Institute sums it up best: “wages, like the price of goods and services, are not the capricious decisions of employees; they are the response of business owners to what consumers are saying that they value. To disregard this economic law is to invite economic disaster”.
Rather than pushing government regulations that are destined to fail, how about we give business owners and employees the freedom to work this out on their own?
Additional reading here…
Here’s a classic blast from the past from world renown economist Milton Friedman…