Thursday, August 3, 2006

Maximizing the Minimum Wage

Well Congress is at it again. They are once more deciding that Market Forces are not enough to run things in our capitalistic society. Yes, it is yet again time for a discussion on raising the Minimum Wage.

Oh joy.

Of course the Liberal side of the blog-o-sphere is ecstatic over this. Or at least they were until House Republicans attached a few riders to the bill, such as lowering the Estate tax, and a Federal Pension bill. Personally I don’t think that even a reduction of the Estate tax is not worth a hike in minimum wage to me. So while the leftie blogs are happy at the potential for a decrease in the price of skilled labor, they are unhappy that the families of the skilled laborers who have died don’t have to give away a huge portion of their life’s savings to the federal government.

The reasons I despise the minimum wage are quite simple. They drive my own salary down. Capitalistic of me I know, but I am a Capitalist through and through. The only reason I get up and go to work everyday is because of that nice paycheck I get. And I have told my bosses this in no uncertain terms. They know without a doubt that I am there for the money, and that is fine with both them and me.

But when we get these increases, I view it as an attack by the Federal government against my livelihood. Don’t believe me?

Then let’s look at some skilled labor versus a burger flipper at McDonald’s. And we’ll not even use college-educated skilled labor for this. An electrician makes somewhere on the order of twenty dollars an hour (this is an average, some jobs get more, some less), and we compare that to the simplified cost of a burger flipper of six dollars an hour. That is somewhere on the order of 333% more for the skilled labor. And that makes perfect sense to me. After all the electrician has spent years as an apprentice before becoming a full fledged electrician, and it will probably be a few more years before they get the higher paying jobs. Now, if we increase the pay which unskilled labor gets to 8 dollars an hour, that drops the percentage difference between skilled and unskilled to a mere 250% more.

While that does not appear to be an extreme drop, it really marks a huge decrease in the purchasing power, as well as the worth of the skilled laborer. Because there are factors besides just that differential between the skilled and the unskilled which affects the purchasing power of an individual.

Minimum Wage Increases are like Tax Hikes, the only thing they do is decrease the GNP. After all, while a large company might consider hiring two or three people at five dollars an hour, they’d come up with a technological solution, which means the need to only hire one at eight an hour. We saw this in the farming industry, and it’s slowly appearing in the retail industry as well (don't believe me? Go to Wal-Mart or Winn-Dixie and look for the 'self-checkout' lanes).

Of course, this is one of the few Liberal Ideas which I would support if they would do it my way. A minimum wage increase, effective immediately, to raise the minimum wage to five hundred dollars an hour for everyone. Oh okay, waitresses can get a mere two hundred fifty still.

If we’re going to slash the differential between the skilled laborers and the unskilled then let’s really kill that, and make it a true level playing field while we’re at it.

And yes, I think that’s a stupidly silly idea. I realize that it would decimate our economy, drive inflation out of control, and make the dollar worth a little bit less than the peso. But I find the entire concept of minimum wage a stupidly silly idea. We’re a free market society, and as such should allow market forces to guide such things as wages and prices.

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