Minimum wage laws are idiotic. The idea of the minimum wage appeals to the charitable side of human nature. The idea of protecting or providing for the "working poor" among us appeals to our sense of justice and fairness. Nobody wants to see other people starving, or who are unable to house or feed themselves. And the expedient way, it seems, to make sure that everybody who works can afford their basic needs is for the government to tell employers how much they should pay their workers.

The federal minimum wage in the United States was first proposed and created as (you guessed it) a New Deal program by President Franklin Roosevelt. Roosevelt’s justification was that, "no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages I mean more than a bare subsistence level. I mean the wages of a decent living." Never mind that the workers also depended on the business for their existence. From the very start, it was an open attack on business, on the free market, and a socialist intrusion into the marketplace by a set of "experts" who believed they could manage the economy better than the workers and owners who made up the business itself. To the left, exploitation of workers must be avoided, unless of course it’s the left that’s doing the exploitation, as we’ll see later.

The minimum wage is perpetuated by continually appealing to the "compassion" of citizens. Not compassion for the business owner who is providing a valuable service, not compassion for his customer who wants to purchase the service at the best price, but for the unskilled, inexperienced, worker. The political infatuation with the minimum wage is based on the idea that every single job should provide a wage that goes beyond "subsistence level."  Every job, they argue, should provide a "decent living."  Apparently, that wage in the United States is currently $7.25 an hour. It’s absolutely silly to think that making $7.25 an hour in New York or San Francisco is going to provide a decent living. Wouldn’t it be more compassionate to raise that to $10 an hour? $20 an hour? $50 an hour? If the motive is compassion, why would we limit ourselves to $7.25 an hour? Since we set the minimum wage at a level that is basically a pittance, compassion must not necessarily be the goal of the policy-setters.

The truth is that we all know that raising the minimum wage will either affect the price of the goods we consume, or cause entry-level, unskilled workers to lose their jobs.  We’re willing to be “compassionate” with other people’s money, but not compassionate to the point that it actually affects our own wallets. And we don’t want to be compassionate to the point where the people we want to help get fired from their jobs because their salaries become unaffordable. We just want to be passionate with money of businesses, but only to the point that the only people inconvenienced are the owners of the business, greedy pigs that they are. So the whole idea of Americans wanting to provide a "living wage" to unskilled laborers is silly, class-envy pandering for Marxist political candidates. Most Americans really believe that people should earn their own money and keep their own money, and if people want to earn more money, they should improve their skills and marketability to employers. But for some reason we’re also afraid someone might think we’re “greedy” or “mean” for not wanting to “help the poor,” so we’re suckers for an appeal to our compassionate sides. But that’s an illogical response to a stupid accusation.

Who actually earns minimum wage in this country? According to the Employment Policies Institute, "The average family income for employees who will ‘benefit’ from the recently enacted $2.10 minimum wage hike is $46,889."  That’s more than double the federal poverty line for a family of four. How can that possibly be?

Six out of seven of these employees either live with their parents or relatives, have a working spouse, or are single and don’t have children.

The vast majority of minimum wage workers are people who live with someone with a well-paying job. They are teenagers or spouses who work part-time. The number of minimum-wage heads-of-household is staggeringly low.

Virtually all minimum wage employees will see their incomes rise as they increase their value to employers by gaining skills through experience. Analysis of US Census Bureau data shows the median raise these employees receive is six times higher than that of employees earning above the minimum wage.

People who start at minimum wage tend to get huge raises early on as their skills and experience increase.  Work experience counts for a lot to employers.

This traditional growth out of entry-level employment explains why less than 1% of employees above the age of 25 are working at the minimum wage.

By the time people exit their college years, 99% of people are making more than minimum wage. The liberal myth that people sit in minimum-wage jobs for decades or while trying to raise their families is simply not true.  It’s a lie.  It’s intended to tug at your heartstrings and get you to beat your chest and demand that somebody “do something” about it. And plenty of heartstrings must get tugged, because it sure isn’t brainstrings that keep this ridiculousness alive.

A business will hire a person if they believe that the value they gain from that employee will be worth more than the salary and expenses associated with them. A business can choose to hire skilled workers for a lot of money, or unskilled workers for less. It may be more cost-effective to hire one very skilled worker to do a job, or it could be more cost-effective to hire several unskilled workers to do the job. It’s all based on the risk the company is willing to take, and the prevailing wages that the market has determined for different levels of skilled labor. But when an outside factor comes in (a.k.a., government) and artificially sets wages for unskilled labor that are higher than than the market suggests they should be, it’s more likely to tip the scale towards businesses choosing to fill their positions with skilled laborers. (Or alternatively, the minimum wage may be a floor that determines what you must get paid. Either way, it weakens an individual’s ability to negotiate for what both parties think is a fair wage.)

The natural outcome of all this means that the market for unskilled labor shrinks.  It’s tougher for young people to get meaningful entry-level work in which to build their business and professional skills.  It’s tougher to get part-time work, because it makes more sense to have a few higher-skilled workers work more hours and reduce the amount of unskilled workers needed. And it has destroyed the idea of apprenticeships, where a young person is able to sacrifice wages in exchange for the opportunity to learn valuable, marketable skills.

So if there isn’t a real benefit for the people who would actually want to work at entry-level jobs, why is there an obsession among lefty politicians with raising the minimum wage? Well, that’s obvious: labor unions! The stalwart defenders of the American working man (and major contributors to political campaigns, not that that has anything to do with it.  Right?).

The bottom line is that union leadership really only care about workers who are members of the labor union. And labor unions tend to represent skilled workers. Union dues are usually a percentage of salary, so the higher-paid union members are going to produce higher revenue for the unions. So the more the balance of labor can be skewed toward skilled labor and away from unskilled labor, the more labor unions stand to gain. Don’t misunderstand me. Labor unions will accept any kind of membership they can, skilled or unskilled. But their goal is to maximize their skim from the highest earners in their organization. And that is done by making it more profitable for businesses to screw the unskilled, inexperienced, entry-level worker out of the labor market in order to benefit the skilled, labor-union member.

The minimum wage restricts the market for young, unskilled laborers to find work and gain experience. It punishes business, particularly small business, by restricting their ability to negotiate salaries with employees. It doesn’t provide anything near a “living wage,” was never meant to, and never will.  Instead, it favors organized labor by artificially skewing the market in favor of skilled labor union membership which drives up union revenue. It’s just another example of socialist, non-market-based price-fixing that always, always fails to do what it intends.

But it plays well around election time, so don’t expect it to ever go away.

Today’s post was inspired by the following video:

This video, in turn, was probably inspired by Part 1 of The 5000 Year Leap: A Miracle That Changed the World.  The gist of the chapter in the book and the first part of the video is that the common understanding of “left” versus “right” is that it pits Communism and Socialism on one end of the political spectrum versus fascism and dictatorships on the other.  The problem here is that totalitarianism is the end result for both sides.  A more useful spectrum, as both sources point out, would be totalitarianism in all forms on the left versus no government—anarchy—on the right.

Communism, Nazism and Fascism are all authoritarian forms of government

One of the ways the common misunderstanding came about was due to rivalry between Germany and the USSR during World War II.  The Nazis were Socialists.  The Russians were Socialists.  They were both authoritarian, murderous regimes that stripped natural rights from individuals in favor of centralizing power in the state.  Philosophically, they were no different, but they both had the goal of controlling Europe.  The rivalry was about which nation would achieve control, not about how they would rule or the treatment of individual rights.  Casting the Nazis on one end of the political spectrum and the Communists on the other end was a clever way of distorting the issue and presenting a false choice.

The fact is that new deal progressives were fans of both.  They admired the central management, the consolidation of control in the hands of intellectuals, and the power of the cults of personality that were built up around Josef Stalin and Benito “Men are tired of liberty” Moussolini in particular.

Progressives and liberals have used this false interpretation of the spectrum with great success.  They cast big-government Democrats in the US as a happy-face, “were here to help” form of government that’s just looking out for the little guy.  They’re supposedly just left-of-center moderates who want just enough socialism to keep the disaffected and forgotten safe from the greedy capitalists.  On the other end, they cast Republicans as Hitler-like fascists, without bothering to actually define fascism.  Along with that came all the baggage that went along with Nazism:  racism, anti-semitism, and jack-booted thuggery that terrorized people with the idea that government enforcers could break down your doors at night and arrest you if you were doing something that wasn’t approved of.  In fact, this interpretation couldn’t be any further from the truth.

The Founders Were Right Wingers

The spirit of the American revolution was built around the idea that people should be governed not by a centralized authority, but by a diverse, distributed form of government.  (Actually, that’s a massive oversimplification, but it suits the general thinking of the political leadership of the time.)  The first political framework that developed, the Articles of Confederation, clearly was an experiment that erred on the side of implementing as weak of a centralized government as possible—there was a ingrained mistrust of government authority.  Under the Articles, the federal government was able to pass legislation, but had no power to enforce it.  The federal government could not levy taxes, and could only request funding from the states (the states tended to not comply with those requests).  It had no power to regulate interstate commerce, so all lawmaking was left up to the states and there was no process for standardizing anything on a national basis.

The eventual development of the Constitution was basically an acknowledgement that the government set in place under the Articles was completely unworkable, and that the federal government had to be granted some power and authority.  But even then, the founders continued to carefully to limit that authority as much as possible.  The ninth and tenth amendments illustrate the idea that, when in doubt, the government should err on the side of individual rights, and that the federal government should defer to states in all cases except when its power and authority were specifically called out in the Constitution.

“Right Wingers” Are Continuing the Founders’ Legacy

So where does that leave us today?  Today’s leftists bristle at the the restrictions placed on the government by the Constitution.  The New Deal was an all-out assault on our founding principles, and its principle advocates believed that they could deliver a more “efficient” government if elite academic “dictators” (sort of like Barack Obama’s czars) were able to implement policy and “manage” the economy without oversight or approval.  FDR outright rejected the idea of limited government, and launched us down the road to socialism through Social Security.  He set out to undermine and nationalize private industries, particular utility companies.  He enforced price controls, production limits and set up the Federal Reserve System. 

The marginalization of the Constitution continues to this day, with a noble personage no less than Al Gore famously describing the Constitution as a “living, breathing document,” the implication being that nothing that’s written in it is set in stone, and whatever it says should be reinterpreted at the whims and fancies of the political elites of the day.  Barack Obama has whined that the Supreme Court hasn’t broken us free from the “essential constraints in the Constitution” and that issues of redistribution of wealth and “economic justice” haven’t been interpreted into the Constitution yet.  So you have the left wanting to expand the role of the federal government and centralize control of the country in Washington, DC, in spite of the essential Constitutional restrictions.

People on the political right, then, are the ones who believe in the timelessness of the individual rights enumerated in the Constitution, who believe in restoring limited government, and believe in inalienable individual rights as opposed to surrendering personal responsibility to centralize authoritarianism.  The Republican party and its leadership, however, are not the font of conservative thought or the motor behind the advancement of the philosophy, as the Democrat party is for its constituents’ ideas.  Rather, the Republican leadership rarely seems to have a coherent agenda or message.

Instead, the motor of conservative thought and action lies, as it always has, with the people, who to this day still hold certain truths to be self-evident.  People who believe that that we are endowed by our creator with inalienable rights are the ones who must stand up and lead, and not ever consent to being ruled.  The government is simply a body.  We must be its thinking, sensing, acting brain.