One of the most misunderstood concepts in America is the minimum wage. The minimum wage was originally intended to be a uniform low-level wage paid to individuals in unskilled jobs. These unskilled jobs, primarily in fast food restaurants and retail establishments, were viewed as jobs young people could use to pay their way through school, gain hands-on experience, and develop positive employability skills that would serve them well in more rewarding, higher level occupations or professions. Minimum-wage jobs were meant to serve as a gateway into the workplace, not to provide lifelong employment. They were also viewed as low-level jobs that could be used to supplement the income of the primary wage earner in a family. The idea was to hold the minimum wage down as a way to ensure a ready supply of unskilled jobs for people who were preparing themselves for better jobs.
Minimum-wage jobs were never intended to be jobs individuals would use to fully support themselves, much less support a family. In other words, the minimum wage was never intended to be what an increasing number of Americans are now demanding it become: a living wage. In fact, fast food workers in several cities recently went on strike calling for a higher minimum wage. Their target wage was $15 per hour. The striking workers were supported by funding from the Service Employees International Union (SEIU), a group whose leaders must be incredibly ignorant of the principles of basic economics.
The most fundamental principle in free-market economics is the law of supply and demand. Because there is a new crop of teenagers who attain working age every year, there are sufficient young people available to fill every minimum-wage job in America and then some. Because unemployment remains stubbornly high, work-ready teenagers are joined by hundreds of thousands of unemployed people looking for a job—any job. In other words, the supply of minimum-wage workers exceeds by far the demand for minimum-wage workers. This being the case, it makes absolutely no sense for an employer to increase what he pays for unskilled labor.
Further, since minimum-wage jobs can be done by people who have no marketable skills and since they can be learned in a matter of hours, employers don’t have to look far to fill these positions. The law of supply and demand works because it is a natural law—like gravity. It works because it comports with the predictable tenets of nature and human behavior. The minimum-wage is an artificial principle established by politicians who disregard natural law and try to coerce nature. This is akin to fighting against gravity. The laws of economics are like the laws of Mathematics. They have a natural order and they work because they follow this natural order. Tamper with the laws of nature and you can expect to experience unintended consequences. This is exactly what has happened with the minimum wage.
Liberal politicians, pandering to the increasing number of unskilled workers who refuse to do the hard work necessary to secure higher paying jobs, continually lobby to increase the minimum-wage. Aided and abetted by unions such as the SEIU, these misguided politicians have been successful. The first minimum wage had barely passed before demands to increase it were heard. What self-serving liberal politicians understand but refuse to acknowledge is that every time the minimum-wage is increased, there are two unintended but predictable consequences: 1) employers cut back on the number of minimum-wage jobs they provide, and 2) employers reduce the number of hours their minimum-wage workers are allowed to work. This is why economic development professionals—people who make their living creating jobs—are uniformly and steadfastly opposed to the minimum wage. They know better than anyone that the minimum wage is a job killer.
Consider the example of Washington, D.C. Local officials in our nation’s capital passed a law requiring selected retail outlets–including Wal-Mart—to pay employees a minimum of $12.50 per hour. At the time this law was enacted Wal-Mart had three new stores planned for Washington, D.C. Wal-Mart officials have now scrapped those plans. This is what typically happens when the minimum wage is increased: a few people make a little more money but a lot of people go without jobs. What is even worse is that continually increasing the minimum wage encourages unskilled workers to stay unskilled when we should be encouraging them to do the hard work of preparing themselves for high-demand, high-skill jobs. As a result of political tampering with the minimum wage, unskilled workers are staying unskilled. Further, they are demanding ever-increasing wages but are doing nothing to increase their value to employers. Apparently liberals see some advantage in expecting employers—those who create jobs—to pay more but get less. What a country.