Minimum Wage Malarkey



During the most recent State of the Union address, President Obama called for an increase in the federal minimum wage to nine dollars an hour. Liberals applauded this proposal, and patted themselves on the back for their ingenuity. Unfortunately for Americans, minimum wage and prevailing wage laws do not serve to help the economy but special interests.

An article in the Minnesota Daily reported that the increase would boost yearly pay at a minimum-wage earning job from $15,370 to $19,080. The effect is a $3,710 increase that liberals claim will help boost the economy.

Consider the other side of this arrangement. Employers must pay an additional $3,710 a year to each employee being paid minimum wage. Employers would also have to pay an additional $284 per employee for additional payroll taxes. The net effect is nearly $4,000 more per employee. A fast food restaurant with ten employees making minimum wage would see its costs rise by $40,000 a year. That $40,000 a year means that the restaurant cannot employ two to three more employees per year. The workers that lose in this scenario are the workers with the lowest skill level.

Higher minimum wage increases wages by decreasing employment, which is caused by increasing the cost of employment. The minimum wage is a price floor that keeps low-skill workers out of the workforce in favor of slightly higher-skill workers.

In a free market, employers and employees come to an agreement on pay. It should not be the government’s job to determine what pay is fair and what is not.

In Hennepin County, Minnesota, flag persons are paid $42.79 an hour according the Minnesota Department of Labor and Industry. The construction worker that switches a sign back and forth from “slow” to “stop” is paid $42.79 an hour in total benefits. This government intervention, called a prevailing wage, causes state funded construction projects to be much more expensive than necessary, bloating state budgets and decreasing employment.

Without this law, if the contractor finds an employee to accept $20 an hour for the same job, the contractor could either decrease the bid or hire another person with the excess.

The MN Daily also tries to hoodwink its readers by saying that working at minimum wagedoesn’texceed the federal poverty line. They quote the poverty line for a family of four and assume only one person working in the family. A true measure would be to quote the poverty line of one person and the pay of one person a year. In this situation, a person would make $15,370 a year and the poverty line is $11,170.

The MN Daily also fails to point out that a family of four earning only $15,370 a year would qualify for a myriad of government benefits such as the earned income tax credit.

If the MN Daily supported “an honest pay,” they should allow employers and employees decide wages, not the government. Instead, they insist on building an “us versus them” mentality that victimizes employees and demonizes employers.