Post by MARIO on Mar 13, 2005 20:36:50 GMT -8
Here's an article I wrote for the college newspaper. It should be published in the paper this week. I'll probably end up receiving a few hundred death threats, but it comes with the territory!
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A Minimum Wage Increase?
Call me crazy, but I happen to think economic truths should determine economic policy. Unfortunately, my political counterparts are motivated purely by emotion. And when that emotion is devoid of fundamental logic, therein lies the problem posed by contemporary liberalism.
Minimum wage jobs are not unimportant. These positions provide young Americans with an introduction to the working world. The human capital provided by such jobs consists of things like showing up to work on time, interacting with customers, proper conduct in a business environment, learning to follow instructions, and cooperating with others. The experience young workers acquire in such basic skills will facilitate their movement up the job ladder. However, workers cannot move up the job ladder if they aren’t on it to begin with!
In spite of a comprehensive amount of economic research demonstrating minimum wage increases are a highly ineffectual means of helping the poor, liberals continue to support them. Labor unions, to which the Democratic Party is beholden, pushes for minimum wage hikes. The reason for this being that unions seek to raise the labor costs for potential competitors. Moreover, minimum wage increases strengthen unions’ position in wage negotiations with employers. Perhaps this may sound cynical, but I’m of the opinion that the liberal elite want to put unskilled labor out of work. In fact, keeping the unskilled and poor in a state of destitution allows the Democrats to maintain their political power.
In a free market, supply and demand determines wages; as does worker productivity. Labor is not exempt from the principle of supply and demand. When the government artificially raises the price of labor, it will result in a surplus of labor and less labor in demand. In addition, do those who support increasing the minimum wage not realize that as wage rates rise, do too will job qualifications?
In short, minimum wage hikes put the unskilled at a severe disadvantage by rendering them unemployable. Companies are profit-making institutions. Thus, if the cost of workers to a business exceeds the potential income generated by those workers, they are likely to end up unemployed. A simple fact: Politicians cannot make workers more productive by government mandate.
Many economic illiterates seem to believe that profits are achieved at the expense of wages. What these same people fail to recognize is that it is profits which allow for business expansion, capital accumulation, more education and training for employees, a more efficient business, and higher-quality products for consumers. In effect, as Ludwig von Mises pointed out, capital enhances marginal productivity, conferring higher wages on employees.
By the way, what exactly is a “living wage”? According the Bureau of Labor Statistics, most minimum wage employees are not poor at all. In 2002, half of all minimum wage workers were under the age of 25 and one-fourth were between the ages of 16 and 19. Three-fifths of minimum wage employees worked only part-time. Many are students and others live at home with their families. Contrary to popular opinion, it is small businesses -- not big corporations -- that employ the majority of minimum wage workers. Inasmuch as many small businesses are underfinanced as it is, raising the minimum wage may very well just put them out of business. The option of raising their prices is not a viable one. Competition between small businesses will simply not permit price increases. Such increases would only serve to drive consumers away.
In 1950, T.S. Eliot wrote the following: “Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm – but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”<br>
It is high time people stop gullibly accepting liberals’ ego trips as benevolent and idealistic efforts for others. After all, the leftist do-gooders are not the ones who have to live with the actual consequences of their asinine policies.
-----------------------------
A Minimum Wage Increase?
Call me crazy, but I happen to think economic truths should determine economic policy. Unfortunately, my political counterparts are motivated purely by emotion. And when that emotion is devoid of fundamental logic, therein lies the problem posed by contemporary liberalism.
Minimum wage jobs are not unimportant. These positions provide young Americans with an introduction to the working world. The human capital provided by such jobs consists of things like showing up to work on time, interacting with customers, proper conduct in a business environment, learning to follow instructions, and cooperating with others. The experience young workers acquire in such basic skills will facilitate their movement up the job ladder. However, workers cannot move up the job ladder if they aren’t on it to begin with!
In spite of a comprehensive amount of economic research demonstrating minimum wage increases are a highly ineffectual means of helping the poor, liberals continue to support them. Labor unions, to which the Democratic Party is beholden, pushes for minimum wage hikes. The reason for this being that unions seek to raise the labor costs for potential competitors. Moreover, minimum wage increases strengthen unions’ position in wage negotiations with employers. Perhaps this may sound cynical, but I’m of the opinion that the liberal elite want to put unskilled labor out of work. In fact, keeping the unskilled and poor in a state of destitution allows the Democrats to maintain their political power.
In a free market, supply and demand determines wages; as does worker productivity. Labor is not exempt from the principle of supply and demand. When the government artificially raises the price of labor, it will result in a surplus of labor and less labor in demand. In addition, do those who support increasing the minimum wage not realize that as wage rates rise, do too will job qualifications?
In short, minimum wage hikes put the unskilled at a severe disadvantage by rendering them unemployable. Companies are profit-making institutions. Thus, if the cost of workers to a business exceeds the potential income generated by those workers, they are likely to end up unemployed. A simple fact: Politicians cannot make workers more productive by government mandate.
Many economic illiterates seem to believe that profits are achieved at the expense of wages. What these same people fail to recognize is that it is profits which allow for business expansion, capital accumulation, more education and training for employees, a more efficient business, and higher-quality products for consumers. In effect, as Ludwig von Mises pointed out, capital enhances marginal productivity, conferring higher wages on employees.
By the way, what exactly is a “living wage”? According the Bureau of Labor Statistics, most minimum wage employees are not poor at all. In 2002, half of all minimum wage workers were under the age of 25 and one-fourth were between the ages of 16 and 19. Three-fifths of minimum wage employees worked only part-time. Many are students and others live at home with their families. Contrary to popular opinion, it is small businesses -- not big corporations -- that employ the majority of minimum wage workers. Inasmuch as many small businesses are underfinanced as it is, raising the minimum wage may very well just put them out of business. The option of raising their prices is not a viable one. Competition between small businesses will simply not permit price increases. Such increases would only serve to drive consumers away.
In 1950, T.S. Eliot wrote the following: “Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm – but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”<br>
It is high time people stop gullibly accepting liberals’ ego trips as benevolent and idealistic efforts for others. After all, the leftist do-gooders are not the ones who have to live with the actual consequences of their asinine policies.
