The Best Minimum Wage: $0

Cameron Jones, Editor

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Minimum wage is widely considered to be a right in American culture. There is the widespread misconception that without minimum wage, everyone would be paid next-to no money and everyone, except the big businesses, would fall into poverty. This sentimentality is understandable because in 1938 that is exactly what happened. Big businesses squashed the average worker and poverty rates soared. One could even argue that minimum wage was the right choice for the time, for the people had little faith in the government after the stock market crash and monopolies that plagued the 1930s. However, what is less understood, is that lack of minimum wage was not the reason for the poverty that struck America during the Great Depression.

Minimum wage was created as an effect of President Roosevelt’s attempts to eradicate poverty, especially that which was a result of monopolies. There were anti-trust laws many years before Roosevelt; however, there was no enforcement of these laws. This lead to the creation of monopolies on essential products which allowed big businesses to raise prices above market value. No one could afford to pay their high prices, so supply increased, demand decreased, and businesses were forced to layoff their workforce. This spiraled out of control and coupled with the crash of the stock market, America was sent into the Great Depression.

There are likely still some naysayers, who would argue minimum wage is beneficial to a country. Let’s look toward Western Europe and see what those countries would have to say on the matter.

Out of 18 countries in Western Europe (Luxembourg, Spain, Greece, Iceland, Germany, Britain, Ireland, Netherlands, France, Portugal, Norway, Finland, Sweden, Denmark, Italy, Austria, Switzerland, and Belgium), nine of them have minimum wages, nine of them do not. Of the nine that do have a minimum wage, Luxembourg has the lowest unemployment rate, at 5.9%. However, five out of the nine that do not have a minimum wage have a lower unemployment rate than Luxembourg, with Norway’s low of 3.3%. Germany, the largest country in Europe, has an unemployment rate of 5.2%. The secret is not too hard to find, they understand the value of one being able to negotiate their worth to a company.

The type of job that pays minimum wage in today’s society is not the type meant to support a family. In fact, most minimum wage jobs are meant for teenagers and college students; they are meant to serve as a first job experience. Yet, as prices rise across the nation, many people feel sympathetic for the low-earning minimum wage workers; therefore, they decided that the correct solution was to mandate that businesses pay a set amount to all employees. As minimum wage increases, though, less teenagers are hired. This happens for two primary reasons.

First, one must understand the concept that just because the employer is forced to pay someone more, it does not mean the value of the work increased. To emphasize the point, let’s use a hypothetical:

Tim is 16 and just got hired for his first job as a dishwasher. Dish washing is a boring, monotonous job, that essentially anyone can do with little-to-no work experience. His employer is skeptical hiring someone so young because Tim still has school, homework, and parents to deal with. The employer feels like it would be a better idea to hire someone who is older with more experience and is more reliable. Yet, because Tim has no prior experience, his employer feels like he can get away with paying him less than he would pay a more experienced man. So, Tim and his boss agree that $5 an hour is a reasonable price for a job as simple as dish washing.

Now, the state that Tim lives in decides to create a $10 minimum wage. To his boss, dish washing is still a $5 job, but now he is being forced to pay an employee $10 to do the same amount of work. Since he is already paying an increase rate, he decides that it is a safer bet to hire the older, more experienced, more reliable employee, instead of the one with no prior work experience.

Essentially, experience and knowledge are equivalent to worth in the business world. If a job does not take experience or knowledge, then it is a low-paying job meant for someone who is looking to gain experience and knowledge. If a job does require experience or prior knowledge, then it is meant for someone who has been through the wringer a time or two.

Secondly, when minimum wage increases, it forces inflation on the economy. If Burger King pays its 10 employees $7 an hour, it would pay approximately $12,000 dollars a month. Similarly, let’s say that Burger King sells a Whopper for $2. It sells 250 Whoppers a day, raising about $15,000 dollars a month. Now minimum wage increases to $10, putting more money into the pockets of hard-working citizens. Except, now Burger King is paying over $16,000 a month on their employees, so in order to be making money, they must increase their prices. This, in effect, decreases the worth of the American dollar because it takes more dollars to buy the same thing.

One of the largest parts of capitalism and the free market is the ability for one to use their money as they see fit. Conversely, it is also one’s ability to work for however much they decided, provided they can find an employer who is willing. Without this allowance, to spend time and money as one sees fit, the youth of America are crippled; losing the advantage they had over their elders: that they know less and therefore can be hired for less.

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The Best Minimum Wage: $0