Why minimum wage is bad and you should oppose it.

A rising tide sinks all boats.

Every few years you see an uprising of emotional people advocating for “$15 minimum wage” and using phrases such as “people deserve a living wage” and “the living wage is a human right”. Have these people never experienced one day of real life? How are they making it at all out in the world with such an incorrect view on such a basic topic? It’s easily explained with basic logic why it’s a horrible idea to have a minimum wage, let alone increase it. There’s also a moral and data-driven/historical aspect as to why the minimum wage is a bad idea. I’m going to attempt to convince you to oppose the minimum wage.

The Economic Argument:

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” — Thomas Sowell

I’m no scholar of economics but being a reasonably logical person with life experience, I can easily recognize things like supply and demand or scarcity. The more of something which exists, the less valuable it likely is and inversely the less of something which exists the more valuable it likely is, but the value of the thing may differ depending on other factors.

Even as a child, we know about scarcity, especially if we grew up relatively below average/poor economically. When we are too young to contribute to an employer and earn currency, we depend on those who parent us to provide. When those who parent us have a low supply of currency we are used to not receiving material goods or special treats that we want. We tend to want these more as they are so scarce in our world. This increases our personal desire for the items (demand). When we’re young our parents will often make arrangements with us to do specific chores in order to receive one of these special treats we find scarce. Why do they do this? These are things they would normally have to do so in a way you could say they are “employing” you to complete a task and in exchange they will provide some of their leftover currency, scarce as it is, to get you what makes you happy. This in exchange also provides a supply the parent “demands” from their child, which is happiness.

As we continue to grow up we end up trading things with our friends. Why do we do this? We value things and so do they. Why do children trade snacks at school? One of them “demands” a salty snack and the other “demands” a sweet snack. They both get something they want by making a consensual trade of snacks.

As we grow even older into maybe our teenage years, we start trading things that are more permanently owned such as video games, trading cards, bikes, skateboards, related accessories and many other things.

The point I’m getting at is that it’s part of human nature to want things. If only 1% of people wanted things then the amount of people with whom we trade with would be greatly reduced.

What do employers want? They want people who can perform the job correctly so that their business makes profit. That’s why someone gets fired when they don’t do their job correctly. When someone gets fired there is a new supply line open (job position) and others who apply are the demand for the position. There’s nothing wrong with profit, and companies do not exist just to serve people. They are not slaves to society. They are the result of the investment and/or hard work of people managing the business and/or investors. It has nothing to do with greed and everything to do with the reality of human nature.

Now we move into the good part: the actual effects based on simple logic. For the purposes of this article I’m going to focus on the people primarily affected by the minimum wage — the lowest earners. The people who make the least in society are effected the most because they are the ones who receive the immediate gratification of a minimum wage hike and also because they are the ones who suffer the most due to the negative results of the minimum wage hike.

What happens when you feel unappreciated at work? Or like your work load is too high for the amount of work you’re expected to perform? What do you do? Let’s present a hypothetical: You are 15 and have your first job working for Burger King for $12/hr, the minimum wage in your state. Your boss is cruel to you and your co-workers and when you make a small mistake like being 25 cents short on your register they yell at you and insult you. The boss also employed his cousin at the same location, and he treats his cousin well. He’s the only employee who never has to clean up the disgusting, filthy bathroom in your horrible neighborhood where drunk Joey throws up every Friday night. Your boss cuts your hours, but not his cousin’s hours. Your boss calls you at 1AM asking you to come in for work early tomorrow morning and once you arrive, he tells you he’s changed his mind. Do I need to go on? I didn’t think so…

In this scenario, would you quit? Yes? Okay, what do you do now? Do you apply for job as a truck driver? Oh, wait… you’re too young for that. Do you apply for a job as a doctor? A school bus driver? An oil rig worker? Longshoreman? That’s right, you’re going for another bottom of the ladder, minimum wage, awful job. You’re going to work at some place like Taco Bell making $12/hr again. Do you think the conditions are going to be better? Maybe in some ways they are, but the truth is when you’re working at these jobs you get fat and smell like grease and you always have to deal with rude customers and annoying and/or rude co-workers or bosses. There’s little difference between most minimum wage jobs. You don’t have the skill or experience to work the higher paying jobs.

Now, let’s try switching this around. What if you ARE the boss at the Burger King or Taco Bell and you’re doing the hiring? You hire your cousin and let him coast by for the same amount that the other workers make while treating him great and treating the others like garbage. Even if it isn’t THAT bad, everyone knows these jobs suck. So tell me what incentive you have as the boss to care about some random minimum wage worker. You’re the big shot, the boss. You can fire him or let him quit and easily find a hundred other eager applicants who will gladly take the minimum wage mandated by the state. The person who quits or was fired is REPLACEABLE and that is just the reality of the situation. There is NO INCENTIVE for the boss to treat you well or provide reasonable work conditions.

Why is that? The reason is the SUPPLY of applications is much greater than the DEMAND the employer has to hire people.

Now, imagine if there were no minimum wage and you’re still the boss at Burger King. You decide that you want to pocket more of the profits and only pay your employees $6/hr while other businesses, with the news of the minimum wage being abolished, have reduced their wages to $10/hr. Do you think that you’re going to find the same supply of workers lining up at the door trying to become employed by you? You pay less and treat them poorly.

Obviously not. They’re going to go to Taco Bell down the street and earn $10/hr. When Taco Bell fails to provide reasonable working conditions and/or benefits/wages, there is an incentive for the employee to negotiate a higher wage or switch jobs. As these companies continue to lose workers they are going to be incentivized into raising wages and/or benefits/working conditions.

Additionally, if the minimum wage is the solution to being poor, why do we have to keep increasing it and why not increase it infinitely or at least to a very high amount? Why kick the can down the road and settle for advocacy of $15/hr when we can advocate for $100/hr right now? It takes thinking about the results of actions and thinking about the future, rather than focusing on the immediate result of an action. The lack of this sort of thought process is why people support things that are a horrible idea.

So in an ideal society, with the minimum wage abolished, the employees would have more control over their wages instead of just being easily replaceable worker #24.

The next logical explanation as to why the minimum wage is a bad idea is that companies can’t afford it. This is mostly going to affect smaller businesses who already operate on slimmer margins and maintain less abundance of wealth. When they are forced to increase how much they pay each easily replaceable worker, they have to find somewhere to get that currency back in order to do so, which means:

• Cutting Hours

• Firing Employees

• Raising Prices

• Reduced Quality of Services

• Reduced Quality of Products
  

Burger King is already pretty awful, so imagine if their food was worse than currently! Imagine waiting longer in line because there are less workers on shift due to hour cuts and/or laying off workers. Imagine less motivated workers as they are worked harder than they were before due to those things. Imagine after enduring all of that, you pay more in the end!

Now imagine what it feels like for those employees who have to work even harder now to pick up the slack for the reduced hours and/or lay-offs. The company will also try to charge more to the facilities which actually create the food/cups/etc before they arrive to the location. They will also want to pay the truckers who deliver these things less. Many truckers are out there choosing which delivery jobs to work. They will have less incentive to choose lower paying jobs. By increasing minimum wage, everyone in the chain is being negatively affected — in every direction and all the way up to the top. Keep in mind I’m not necessarily saying all the things in the bullet point list will occur, but they are all possible, to varying degrees and simultaneously.

The reality is that minimum wage is part of an emotional, child-like, utopian view of human nature and how the economy should operate. Despite this, people continue to advocate for this horrible policy…

The Moral Argument:

“Freedom, in a political context, means freedom from government coercion. It does not mean freedom from the landlord, or freedom from the employer, or freedom from the laws of nature which do not provide men with automatic prosperity” — Ayn Rand

As mentioned in the previous section, it is part of human nature to want things. It’s part of human nature to make consensual trades for things you want. It’s natural. It would exist regardless of the existence of the state. The state’s purpose is not to try to enforce what it deems equal — in opposition to what the people want. The people are supposed to be free in the United States and any free society.

The simple reason the minimum wage’s existence is immoral is because the government enforces it by violent force. They are a third party who are meant to protect citizens from aggression by others (at most) and are instead using their power to force non-consensual currency trade.

In a more moral society, the individuals who operate businesses would be allowed to pay the wages they see fit. The employees could force their hand by leaving for a superior employer if wage increase negotiations aren’t successful. Everyone in this scenario has maximal freedom.

Under the current US system, individuals who operate businesses are forced by the state to pay a certain wage, at minimum. What happens if they refuse to pay those wages? The government will, at very least, try to fine the business operator. What happens if the business operator refuses to pay the fine under the moral standing that it’s their choice what to do with their own currency? The government will tell them to come along to jail. What if the business operator refuses to come along to jail and physically prevents the police from aggressing upon them? The police will continue to escalate force against the citizen until they are subdued. If the police are unsuccessful in subduing by force, they will end up shooting the business operator — especially if he protects his life with his own weapon.

There may be alternative outcomes to refusing to pay employees a minimum wage including the state coming after the business operator demanding it be shut down. The same results will occur, with the citizen ultimately being oppressed by violent force from the state. There is no scenario in the current system where one may continue to pay what they wish because the government will always inevitably come with guns to shoot the business operator.

Keep in mind as well that when minimum wage workers at Burger King and Taco Bell receive a bump in pay, the higher paid workers who spent a lot of time, effort and/or have studied greatly in order to earn their pay are not receiving a pay raise as a result of the increased minimum wage. So while prices increase on products and services, these higher skilled professions suffer. The power of the minimum wage worker’s currency is increased in ratio to the power of the higher wage worker’s currency via an unfair and violent government policy.

How exactly is it moral for a third-party who is meant to represent the people to come in with guns and force a business operator at gunpoint to give away his hard-earned currency? It’s not.

It is wholly immoral and sadly it’s the world we live in. Lowering the minimum wage will not be enough — it must be completely abolished to satisfy the moral prerequisites of a truly free society. Minimum wage is not something protecting rights of individuals, but rather a violent policy in which the state robs currency from the business operator and hands it to the low tier workers.

To make matters worse, they steal from (tax) the employee and business operator every time the business operator is forced at gunpoint to pay a higher wage to the employee…

The Historical Argument:

​“Those who cannot remember the past are condemned to repeat it.” — George Santayana

If somehow by now you still aren’t convinced, you should first work on your logic and morality because the first two points are so good that the data shouldn’t matter.

Many countries don’t have minimum wages. Why aren’t the people there establishing this practice if it’s such an important factor in society which improves the standards of the citizens — especially the poorest of them?! People make more and are better off under a higher minimum wage!! Don’t you know?!

Except, they don’t…

In 2014, Seattle, Washington decided to pass a law to increase minimum wage to $15/hr by 2021. Over time, once the minimum wage started increasing, the entry-level job growth started declining — but only in Seattle. The rest of Washington increased in entry-level job growth.

The city of Seattle artificially increasing the minimum wage DOES NOT improve economic conditions for its residents. Also, if companies just wanted to pay nearly nothing in wages, then why does Switzerland have such a low unemployment rate? Wouldn’t people just leave for a country with a minimum wage? Why would anyone live in any of the countries without one if it’s such a great thing?

In 2014, Jeffrey Clemens and Michael Wither conducted research and published a paper breaking down the effects of the minimum wage hikes and found “significant, negative effects on the employment and income growth” of minimum wage workers whose minimum wages rose by 30% across the US.

A massive 1.4 million jobs were lost across the US and to make matters worse those losses of employment were the people who advocates of minimum wage hikes claim it supports!

Speaking of those people.. who do you think are going to be effected the most? The well-off kid in a decent neighborhood who was raised properly? The kid who has respect for others? Or the kid without a father, who was raised in a poor neighborhood and has outbursts of anger as an over-reaction to a rude customer and fails to show up to work on time. The latter is obviously the employee who is going to be fired before the more well-off employee.

Keep in mind as well that over time, from 1979 through 2020, less and less US hourly employees (as a percentage) have made at or below the federal minimum wage. In 2020 that number was as low as 1.9% of the work force. The point you should take away from this is not that “the minimum wage hardly effects anyone” but that “the minimum wage effects the people at the bottom-most rung of the ladder”. It also means that employers are often paying more than the minimum wage because this is how competition works — the company wants better workers and pays for them. This is another way that small businesses are hurt by these violent state policies.

For those of you who aren’t aware, we have a federal minimum wage in the US which is the minimum a state’s minimum wage must be, and we have state minimum wages which allow for a state to violently enforce a minimum wage higher than the amount forced upon them by the federal government.

You can see above that the states highlighted in dark blue were “Bound by Fed. Min.” which means that as a result of the federal minimum wage hike, the business operators in those states had to start paying more due to the violent minimum wage policy enforced by the federal government. Conversely, the light blue states did not have to change anything because their minimum wage at a state level was already higher than the new federal minimum wage.

Now take a look at the results on the average effective minimum wages in states bound by the federal increase vs states not bound by the federal increase.

Notice that when the two vertical black lines are plotted (the moments at which minimum wage increases took effect), there was a temporary increase in average effective minimum wages, but wages were stagnant afterwards. In the states which the increases were not applicable there was no artificial spike in effective wages induced by government threat of force, but rather gradual increases. This indicates that you do not need manipulation by the state and furthermore that without the manipulation (red dashes), effective wages are increasing in this example while with state manipulation (blue line) they remain flat until the state violently manipulates wages again.

“The minimum wage has its greatest impact on the market for teenage labor. The equilibrium wages of teenagers are low because teenagers are among the least skilled and least experienced members of the labor force. In addition, teenagers are often willing to accept a lower wage in exchange for on-the-job training. . . . As a result, the minimum wage is more often binding for teenagers than for other members of the labor force.” — Greg Mankiw of Harvard University

The first minimum wage of 25 cents all the way back in 1938 (Fair Labor Standards Act) resulted in a loss of 30,000 - 50,000 jobs. Keep in mind the US population back then was almost 300% less. Once again, this was primarily in lower income areas and younger workers. The act of violently robbing a business operator and giving their currency to the low skilled employee has never been “fair”. It’s unjust, and we need to advocate to abolish the minimum wage to stop this unfair practice which has taken place in the US for almost a century.

The minimum wage requirements have also provided incentives for a business operator to hire illegal aliens, which have no business being in our country to begin with.

“The economic impact of the 2007-2009 increases in the federal minimum wage (MW) is analyzed using a sample of quick-service restaurants in Georgia and Alabama. Store-level biweekly payroll records for individual employees are used, allowing us to precisely measure the MW compliance cost for each restaurant. We examine a broad range of adjustment channels in addition to employment, including hours, prices, turnover, training, performance standards, and non-labor costs. Exploiting variation in the cost impact of the MW across restaurants, we find no significant effect of the MW increases on employment or hours over the three years. Cost increases were instead absorbed through other channels of adjustment, including higher prices, lower profit margins, wage compression, reduced turnover, and higher performance standards. These findings are compared with MW predictions from competitive, monopsony, and institutional/behavioral models; the latter appears to fit best in the short run.”

In 2011, a research paper authored by Barry T. Hirsch, Bruce E. Kaufman and Tetyana Zelenska explained that another result of minimum wage hikes was employers trying to make up for the violent mandates by providing less of an increase when handing out raises to employees. They also applied stricter attendance policies, demanded the employees do work in a shorter period of time and dropped extra tasks in the hands of the employees. Additionally, they reduced hours of the employees, just like I mentioned earlier in my economic argument.

You can see above the incentivization of employers to preserve themselves after the state violently forced non-consensual trades to occur.

Conclusion:

If by now you somehow still support minimum wage, I’m not sure what else to do. I’m not asking you to become an Anarcho-Capitalist (and I’m not implying that I am one), I’m just asking that you apply basic logic, morality and observe the reality of the effect minimum wage has on society as well as the competitive nature of mankind.

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