March 17, 2006
The social engineers are at it again. Not only are they busy in Washington trying to raise the federal minimum wage, their state counterparts are trying to outdo them. To date, 18 states have their own minimum wage laws that surpass the federal minimum. Tennessee is the latest state to consider a state minimum wage.
Proponents want it set at $6.15 per hour, a dollar more than the federal minimum wage. But, where does it stop? Michigan, another state that already has its own minimum wage, is not satisfied with a paltry $6.15 per hour. They want their state minimum wage set at $7.40 per hour.
That begs the question: How much is enough? Why stop at $7.40 per hour. Why not $20 per hour or $25? If you're going to set a rate for employers to pay, how do you determine that rate?
It seems our lawmakers simply pull a figure out of the air. When queried about their motivation they always proudly profess they're doing it for the poor. Let's stop and think about that for a moment. If you have 20 employees and the minimum wage goes up a dollar per hour, that's 20 dollars per hour more you have to pay. That's $160 per day or $3,467 per month. That's an additional $41,600 per year! That's about the equivalent of 4 employees' wages. If you're operating on a tight profit margin, you'll have to lay off 3 or 4 people just to keep your head above water, and that's exactly what many employers end up doing. You may be helping 16 employees but 4 of them will end up with no job. All because some do-good lawmakers thought it would help the poor.
When the federal minimum wage went into effect in 1938 it was 25-cents per hour. Advocates of increasing the minimum wage have complained that it hasn't kept up with inflation. They keep repeating this lie because they're relatively sure you'll never call them on it. However, all one needs is an inflation calculator. Had the minimum wage been tied to inflation it wouldn't be $5.15 per hour today. It would be $3.22! Because, you see, the minimum wage was never meant to be a living wage . It was meant to cover the minimum work.
Just what qualifies as the low job on the totem pole? Flipping burgers? Cleaning toilets? The next time you're at your favorite burger joint, inquire about employment and see how many jobs are paying just $5.15 per hour. My bet is not many. Why is that? It's because pay is market driven. There are too many jobs that need to be filled and too few people to fill them. Therefore, employers have to offer more. Not just more money but more in the way of incentives like healthcare insurance, 401(k) plans and the like.
Out of over 5 million people in the state of Tennessee, only about 7,000 are working for the minimum wage. So, if only a handful of people are actually making the minimum wage, why the big push to raise it. That's the important question. One of the reasons is the unions. Their pay structure is based on the minimum wage. When it goes up, so do their wages.
I would submit to you that the minimum wage is totally unnecessary. Oh, but if we didn't have the minimum wage the evil corporations would be working people for near-slave wages. That's simply not the case. The market dictates the wages and the market seems to be working quite well. Let's try not to mess it up.