minimum-wage

Here Is Why The Real Minimum Wage is $0 Per Hour

If a person can’t get a job because he doesn’t have the skills or the skills he does have don’t meet the job requirements, he won’t be employed. For the unemployed, the minimum wage is $0 per hour. At this point in time, governments can’t force companies to hire people, but that day may come.

Because governments pass laws that employers must pay a minimum salary, people with lower skills can’t compete for jobs by offering to do the job for less in order to acquire skills and experience.

The minimum wage is about freedom. Think about it. The government is forcing employers to pay people a certain amount of money whether or not a person is worth $15.00 per hour. It’s no wonder that a majority of voters have no problem with the government taking ever higher amounts of money from workers in the form of taxes. “They can afford it . . . They should be made to pay more.”

When the minimum wage goes up, union wages and benefits also go up. That’s why unions are always behind an increase in the minimum wage. Unions can hold companies hostage to force up wages. Unions can force non-Union workers to pay union dues as a most recent 4-4 Supreme Court decision made final a lower court ruling.

When the minimum wage goes up, the wages of union employees have to go up as well, so they want new contracts to reflect a “proper” wage distance from the meager minimum wage earner.

Higher wages also mean higher prices. Not only will California employers have to pay $15 per hour, but Social Security and Medicare costs will also go up for the employer on the increase. In addition, California will get more tax revenue since the increase in pay will mean more money to tax.

Is it any wonder that California Governor Brown was quoted as saying that “economically, minimum wages may not make sense.” So why did he sign the new minimum wage law? Because it makes political sense in states like California and New York.

This is clear.

Gains made in wages will be passed on to prices for goods and services. In time, everyone will be back to where they started. Market conditions, demand for goods and services, and the state of the economy determine wages. Of course, employers are always looking for ways to cut costs, but in the end, in order to stay in business, they have to hire the most skilled workers at the forced higher wage.

Employers who hire minimum wage workers are usually working on small profit margins. If they get hit with something like a 25 percent increase in the minimum wage, it’s possible that to make up for the additional labor cost, an employer may lay off a fourth of his workers and distribute the work to the remaining employees. Unlike our government, businesses can’t print money.

“‘First, you have to raise prices, otherwise you’ll be out of business,’ owner Selwyn Yosslowitz [of Marmalade Café] told the Times. So higher prices for diners. That’s ‘first.’ We imagine you can guess what’s ‘second.’ ‘We will try to re-engineer the labor force,’ Yosslowitz said. ‘Maybe try to reduce the number of busboys and ask servers to bus tables.’ In other words: ‘Maybe’ we’ll fire some folks and the people who keep their jobs will have to be more efficient.” (Source)

Inexperienced young people are the first to suffer when the minimum wage goes up.

It used to be that when two people competed for the same job (skill levels being equal), a person who could undercut the amount an employer was willing to pay often would get the job.

An employer could take a risk on someone who lacked experience because he didn’t have to pay him what an experienced worker might demand. Many of the jobs available to teens were low skilled anyway.

By making it illegal to pay someone less than a government-mandated minimum wage, those with less experience are at a disadvantage. Employing teenagers is now a classic Catch-22 dilemma.

“Do you have experience?,” the shop owner asks.

The teenager is honest and shows initiative by answering, “No, but I’m willing to work at a lower wage to gain experience.”

“Sorry,” the shop owner says. “I would be breaking the law if I hired you for any amount less than the minimum wage. I can hire someone with experience at the same wage I’d have to pay you.”

“But I can’t get experience if you won’t hire me.”

“Tough luck. Complain to your congressman.”

Brian Levine, co-owner of Tropical Smoothie Café knows the law and the logic of the marketplace:

“A lot of it comes down to what we can afford, versus the hours they’re available to work. We are more or less, the minimum wage type of place. I would obviously prefer to pay minimum wage, but I’d also go for an adult and pay them an extra dollar an hour. They’re available, have more experience and are quicker to train.”

Renee Ward, the founder of the job posting site Teens4Hire.org, offers a similar story. “If you have two candidates for a job, and one has experience and will take $10 an hour, and the other is a teen with no experience, who do you think would get the job? When jobs aren’t there for anyone, it’s that much harder.”

Once again, governments are the problem, not the solution, to job and wage growth.

You might respond, “Sure, you can say this because you make a lot of money.” I don’t know what a lot of money is, but I sure make more than I did at my first job — $50 a week to wash pots and pans at a country club. Do the math. It was a little more than a dollar an hour.

I worked a New Year’s Eve party at a restaurant when I was 16 with no hourly wage. The only money I got was in tips. The no-wage guarantee made me work very hard to get good tips. I made $20 for three hours of work. That was in 1966. That was big bucks back then.

I worked in the produce department at Kroger after school and weekends. This experience enabled me to get a job in Florida when the economy was soft. When I went in to apply, they told me that they were not hiring. I then said, “But I have experience.” I ended up working 60 hours a week. There was no union. My hard work was noticed, and I was offered the assistant manager’s job at a new store the company was opening.

It was these types of jobs and disgusting working conditions that incentivized me to do better. I gained work experience and references. I worked through high school, had two jobs in college, and worked my way through graduate school as a custodian and assistant bookstore manager.

Get the government out of the minimum wage business and you’ll see the economy grow, prices fall, and wages that will keep up with expenses. The best workers will get the best jobs at the best prices.

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Gary DeMar

Gary DeMar was raised in the suburbs of Pittsburgh, Pennsylvania. He is a graduate of Western Michigan University (1973) and Reformed Theological Seminary (1979). He has served as researcher and writer at the Christian Worldview ministry American Vision since 1980 and President since 1984. Today he serves as Senior Fellow at American Vision where he lectures, researches, and writes on various worldview issues. Gary is the author of 30 books on a variety of topics – from "America’s Christian History" and "God and Government" to "Thinking Straight in a Crooked World" to "Last Days Madness." Gary has been interviewed by Time magazine, CNN, MSNBC, FOX, the BBC, and Sean Hannity. He has done numerous radio and television interviews, including the “Bible Answer Man,” hosted by Hank Hanegraaff and “Today’s Issues” with Tim Wildmon and Marvin Sanders. Newspaper interviews with Gary have appeared in the Washington Times, Toledo (Ohio) Blade, the Sacramento Bee, the Atlanta Journal-Constitution, Marietta Daily Journal, San Francisco Chronicle, The Orlando Sentinel, and the Chicago Tribune.

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