8 key arguments against raising the minimum wage to $15 per hour

The ignorance of economics in the United States and in other Western countries is widespread. It seemed that those who misunderstood economics the most was the Occupy Wall Street crowd, but these are the ones who have garnered the most mainstream attention because they have nothing else to do besides being professional protesters.

Over in Seattle, socialist Kshama Sawant was elected to city council on a campaign to raise the minimum wage to $15 per hour, institute a millionaire’s tax, broaden rent controls and the nationalization of Washington State corporations like Amazon, Boeing and Microsoft. Now, all of the above are economic disasters waiting to happen, but why insist on such policies then?

Surprisingly, Sawant has studied and taught economics, but it definitely appears that she has never read the works of Murray N. Rothbard, Ludwig von Mises, Henry Hazlitt or F.A. Hayek – instead, she most likely focused her reading on John Maynard Keynes and Karl Marx.

Recently, she held a press conference reaffirming her commitment to a $15 minimum wage – why stop at $15? Why not $50, $100, $250 per hour? Anyway, this artificial increase and government coercion will not lead to prosperity for anyone other than the unions she supports and represents on city council – unions endorse a higher minimum wage to protect their own jobs.

The issue of minimum wage has been widely discussed by such great minds as Rothbard and Milton Friedman. Rothbard (Mr. Libertarian) famously called minimum wage “compulsory unemployment” because the policy that is meant to help the poor, the unskilled, immigrants, the uneducated actually hurts them in the end.

Unfortunately, the reporters never actually question Sawant and others like her over the unintended consequences of minimum wage. Instead, the journalists just transcribe what she said in their articles without quoting any of the aforementioned economists.

Much like Economic Collapse News has noted in the past, here are some of the points that need to be addressed when talking about the minimum wage:

Unions

Through threats, violence and legislative coercive power, labor unions get their way, much like a crying child in a toy or grocery store. They are the ones who take to the streets and protest over any action they deem is a threat against them or the poor. At the same time, unions experience one of the highest salaries and the best benefit plans similar to their associates in Washington (or Queen’s Park).

Unionized workers are in direct competition with unskilled laborers. Therefore, unions are in full support of a higher minimum wage because it increases their chances of staying employed. Essentially, the higher the minimum wage is the less likely an unskilled or uneducated individual will attain a job.

In the end, the only ones who truly benefit from a legislated minimum wage are unions and the next entity…

Big business

If you’re a big business, what would be the best way to defeat a smaller competitor? One would think through free market practices, but with the size of government, it would be a futile exercise. Instead, big business would use the power of legislation to mandate companies to pay for a higher minimum wage.

Akin to the thousands of pages of regulations out there that can be abided by corporations because they can afford it, big business can also afford a higher minimum wage. Small- and medium-sized businesses, meanwhile, cannot. Is there a better way to defeat the competition than to get the government to mandate a higher minimum wage?

Prices

When customers enter a store, they are paying for the good and service, overhead costs, benefits, labor costs, revenues and profits. Once wages go up then so do the prices at stores. Peter Schiff, president of Euro Pacific Capital, recently completed a comical video at a Walmart parking lot showcasing that customers don’t want to pay higher prices thus not supporting higher pay for the Walmart employees.

Qualifications

Not only would unemployment rise, but the qualifications one must have to even be considered for a minimum wage job would dramatically increase. Think about it, if you’re an employer and you’re forced to pay a certain amount in wages then you’re going to seek the best possible person for the job rather than a teenager or an unskilled worker.

Dependence

A higher minimum wage usually equates to a business cutting hours or reducing staffing levels. This means that the workforce will have to depend on the government through the means of food stamps, welfare and other state-run programs. Perhaps this is why predominantly the left supports increased minimum wages.

Just $15?

This a standard argument against raising the minimum wage, but it’s an important one: why stop at $15 per hour? If the minimum wage is beneficial and guaranteed to lift the poor out of poverty then why not just boost it to $50 per hour? Why not $100? What about $500? Also, why is $15 the arbitrary figure?

Income gap

A recent study from the American Action Forum (AAF) found that raising the minimum wage could actually widen the current income gap. It concluded that most Americans living in poverty are not earning a minimum wage salary – in fact, the largest demographic of minimum wage workers are teenagers coming from middle-income households.

Everyone else

If $15 per hour is imposed in Seattle and perhaps elsewhere then what about the rest of the labor force that earns $15, $16 or $17 per hour? Will they automatically get higher wages as well? What about jobs that are more complex than flipping burgers and taking orders that take in $15 per hour? These are questions that are usually avoided by proponents of the minimum wage.

Abolishing the minimum wage is not a popular opinion these days because of how many people are economically illiterate. Getting rid of the minimum wage is the only way to increase employment, determine how much workers are worth and ending poverty.  On top of eliminating the minimum wage, the government also has to get out of the free market, except for enforcing contracts and penalizing those who are committing fraud and using force.