Welcome to the life of an American female. Aimlessly wandering the road of youth and adulthood, she shares her tales of growing pains, discoveries and ideas. There might also be a pinch of happiness, a dash of light, and a micro-amount of wisdom within. The author is not liable for any psychological damages you may incur while reading this blog.

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Saturday, January 7, 2012

Minimum Wage and America

I've been reading a lot lately through Liberty Pen and The American Thinker...and I've come to the same conclusion they have - minimum wage is bad for our economy. To better address this, let's start from the beginning.

Minimum wage was first enacted in New Zealand in 1894. The ideas driving the minimum wage law was to control the proliferation of sweat shops in factory settings and to pay people fairly for their work. The pros and cons of minimum wage are still argued heavily today.

George Stigler said, "Forbidding employers to pay less than a legal minimum is equivalent to forbidding workers to sell their labour for less than the minimum wage. The legal restriction that employers cannot pay less than a legislated wage is equivalent to the legal restriction that workers cannot work at all in the protected sector unless they can find employers willing to hire them at that wage."

Unemployment is currently very high. Workers should be able to sell their labor for what they feel it is worth, and employers should be able to pay workers what they feel they are worth. Let's look at a couple of job scenarios:

Fast Food Worker - This is considered an unskilled job, light labor. Light labor means lifting 20 lbs occasionally, 10 lbs frequently. Job duties include making sandwiches, operating fryers, drink machines, filling orders based on instructions called out to them or on a ticket or screen. It takes 30 days or less to learn the job. Some workers are given specific duties, such as only operating the fry station or grilling station. There are timers on the machines, and the tasks performed are simple and repetitive. Why should this person make $7.25 an hour? Because that's minimum wage. That amount of money isn't much, no, but it's actually enough to live off of, though very poorly.

Receptionist - The description varies widely for this job, but it's considered an unskilled to semi-skilled job...usually sedentary. Some places hire their receptionists at minimum wage, then may/may not pay more depending on performance. Receptionists are usually required to know about the business, answer customer questions to the extent of their knowledge, file paperwork, use a computer and type.

Animal Shelter Worker - This is also considered unskilled work. Shelters often operate off donations and limited income from taxes. Here's an example of minimum wage laws hurt the economy - and the job world itself:

Worker 1: Makes minimum wage, so he says he will do "minimum work." He does the bare basics and then sits around for the rest of the day. He still gets the same amount of pay whether he excels at his job or not, so he feels like it's useless to do more.

Worker 2: Makes minimum wage, but he is proud of his work. He tries to do his best every day, even though his coworkers discourage him from it because it "makes them look bad." Worker 2 cares about doing his work and doing it right, so he continues to work hard.

If there was no minimum wage law, Worker 1 could be paid less for his less-than-satisfactory work. Yes, he may quit, but you'd be rid a poor worker. Worker 2 could then be paid more and possibly promoted for his hard work, making the work rewarding. Why pay 2 people minimum wage when you could just pay one worker more and get the same amount of work done?

Minimum wage also discourages employers from hiring unskilled workers. They want to get the most "bang for their buck," so to speak. Why hire a highly unskilled worker when you can get a better skilled worker and pay the same? Unskilled workers need jobs, too. If employers were permitted to pay less, they would be more inclined to hire unskilled workers.

Think about it.

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