Minimum Wage, Good or Bad?

   The minimum wage supporters are pushing harder than ever.
   The people in favor of it like to refer to a "living wage," whatever this is. It has yet to be definitively defined, although it is touted as the least amount of money a person or family needs to survive. They generally view the government as being responsible to force the employers to pay a set minimum hourly wage.
   Many of the leaders in the argument against the minimum wage are business owners, and they are frequently demonized for this, even though they rightly maintain that they need to preserve their profit margin in order to stay in business.
   In this they are correct. However, there is a problem with their argument which prevents them from prevailing in the debate.
   Many economists also warn against the minimum wage, as they have determined that it would only raise prices in the long run, and the relationship between prices and wages would return to equilibrium, just at a higher numerical value.
   They are also correct, but their argument has the same failing as that of the business owners.
   Those who support the minimum wage will almost always prevail through emotion and deception.
   We have all heard the many emotional arguments about these poor people not having enough to live comfortably on. There is no need to replay them here.
   Deceptively, we are told repeatedly that business owners are wealthy, greedy, individuals who aim only to pocket as much money as possible at the expense of others. This is fostered by a minority of business owners who have demonstrated themselves to be exactly that, but is certainly not true of the majority.
   In my opinion, an unfortunate side effect of this kind of thinking is that business owners are led to counter with the argument that their profit margin will not support a higher minimum wage. Although this is frequently correct, this counter does not suffice to refute the accusation of greed, mostly because people are more willing to accept the argument that someone else is greedy long before they will admit to their own shortcomings.
   What will be the effects of a higher minimum wage? The devaluation of the dollar, mediocrity in the workplace, increased unemployment, and the possible end of the minimum wage.
   To understand how the dollar will be devalued, an understanding of what the dollar really is must be accepted. The dollar itself has absolutely no value, unless its value as kindling in starting a fire is considered. The dollar is simply a means to compare value between multiple different products or services, and a convenient means to exchange them. Whether we give it a value of 1 or 10 is meaningless to the relationship between supply and demand, except where it temporarily skews this relationship in the short period of time between the revaluing of the dollar and the return to equilibrium in the supply and demand relation. The minimum wage does not change the amount of supply and demand, it just changes the amount of dollars used to measure it. The number of dollars used to measure a resource has no bearing on the amount or quantity of that resource available, nor on the need for it.
   How does the minimum wage cause mediocrity in the workplace? No matter what the business is, it has a certain amount of value to use to pay wages. The assigned value of the dollar does not change this fact. What the minimum wage does is force the business to pay an increased value to entry level and substandard workers while reducing the amount of value left to reward the better workers and those with the most experience. For example, if a business has enough available value to pay 10 workers an average of $10/hour, and there is no minimum wage, that business could start people at $5/hour, and give them generous raises as they earned them, as long as the total in wages did not exceed what the company could afford. This would be a powerful incentive for workers to stay longer and do a better job, as they could potentially triple their wage by doing so. If, however, the minimum wage was $10/hour, in this scenario the business would be required to start all employees at the $10 level, and would have no room for incentive raises. In this situation, no one would have a tangible financial reward for doing better or more efficient work, and human nature being what it is, most workers would simply work to the level of the least common denominator, eliminating competition for the higher wage which is no longer available and creating the aforementioned mediocrity.
   The resulting increase in unemployment should be obvious. Once equilibrium returns after the initial change in the assigned value of the dollar, the consumer's quest for lower prices will again take over. As long as there is an area which does not enforce the same minimum wage, there will be cheaper prices to be obtained from that area, which will increase the demand for products from that area and decrease the demand for products originating from the area in which the minimum wage applies.
   Eventually, as hourly wages are increased by government edict to higher and higher levels, the hourly wage will be necessarily replaced by other means of pay, such as commissions, piece count, and pay through independent contracts. When this happens, the minimum hourly wage will be meaningless, as it will be increasingly less available.
   The minimum wage will certainly go up, thanks to politicians who pursue votes by preying on the people who are uninformed about the economic consequences of it. Most of those who really understand it claim that it is a terribly destructive idea in terms of the economic health of the country, but I am beginning to disagree. Rather than fighting about it, maybe we should allow the politicians to raise the minimum wage as fast and as high as they dare. This would actually hasten the demise of the hourly wage, causing it to become obsolete much faster, and allowing people more opportunity to exchange value of labor, products, and services at a much more equitable level once the hourly wage is gone.
   Let's raise the minimum wage so high that the hourly wage disappears, and we can get yet one more step closer to the free market principal of exchanging value for like value.
   The central planners and socialists desperately want a minimum wage, but history shows that all of their plans succumb to the free market as they fail, and the sooner their plans fail, the sooner we will be free of them.