The whole issue of the minimum wage brings in a conundrum: we see people working for wages that would not provide enough revenue to pay for an apartment, and think it wrong. But we also see that the more laws we pass to rectify that situation, the deeper the problems become. So what’s to be done? The answer is to listen to Dr. Milton Friedman, who said that we should judge programs by their results instead of their intentions. In that regard, the fact is that when the government mandates that workers’ wages be increased, it obviously makes that labor more expensive. And the result of that is for many employers to lay off some employees and replace them by automation (think self check-out machines at stores like Home Depot and self-ordering kiosks at fast food stores like McDonald’s). For example, the Congressional Budget Office estimates that nationally increasing the minimum wages even to the level of $10.10 per hour would cause 500,000 workers to lose their jobs. And for the employees that remain, employers will also try to reduce their number of hours of work – particularly for overtime. As a result, minimum wage laws actually result in victories for robots and defeats for most employees. (Sorry, the callous fact is that in today’s world some workers are simply not worth $10.10 per hour.) And these are only just some of the problems that result. Thus, almost literally, the only good thing that results from minimum wage laws is that legislators get to feel better about themselves.
So what is a better approach? Liberty. Let the free market control the process by allowing employers and employees to negotiate their employment contracts – of course with allowances for safety in the workplace and for the courts to enforce the agreements reached. That will result in increased employment, which will overall be beneficial because it is healthier for society to have, for example, 100 people working for $10 per hour than 65 people working for $15 per hour. Then if society concludes that there should be a Safety Net of minimum income that everyone legally in our country over 18 years of age should be receiving, let government establish one. Again as Dr. Friedman said, the difference between the wealthy and the poor is that the wealthy have more money. So give the poor some money – up to a basic amount (with allowances made for those with special needs). This would probably be revenue neutral, because we could repeal all other welfare programs, along with the enormously expensive bureaucracy needed to administer them. But, critically, there should always be an incentive for people to earn the extra dollar. This would result in better situations all around: greater employment, greater flexibility, less complexity, an enormous reduction in homelessness (because the free market would quickly create low-cost room and board facilities for the homeless who received their monthly stipends), lower government expenses, and incentives for people to improve themselves – which is not at all true for today’s welfare recipients. So, yet again, Liberty works!!
Judge Jim Gray (Ret.)
2012 Libertarian candidate for Vice President,
along with Governor Gary Johnson as the candidate for President
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