RWN’s Readers Make The Case Against The Minimum Wage

The minimum wage is one of those ideas that sounds good…until you actually consider the ramifications of forcing businesses to pay workers more than they’re worth. It costs jobs, it hurts businesses, “fewer than one out of five minimum wage workers has a family to support,” and let’s face it — nobody puts a gun to your head and forces you to take a low paying job.

Here’s a little more detail from a couple of RWN’s readers who posted in the comments section on the sort of problems the minimum wage causes in the real world (does RWN have sharp readers or what?)…

I get a kick out of the assumption that business owners are hiring workers they don’t need, because they only have to pay them 5.15 an hour, and will not need them if the minimum wage is raised to 8.00 an hour.

Um. Have you ever worked in business? Do you know what “expanding” is? Do you understand revenue vs. profit? If I hire someone to make me profit, lets say that if she works we can set up another cash register and customers who could not shop before because of the long lines can now shop, the added revenue after subtracting cost of merchandise is about $10 / hr. Well, at a wage of $5/hr this is worth doing. Its only about $50/day extra, but maybe its worth it. But, if we raise the minimum wage and now I have to pay $7.25 an hour, well now my profit is only $28. Is it worth hiring her? I don’t know. Certainly there is a wage at which it won’t be worth it.

For small businesses, this wage is pretty low. I go into some more detail on the post on my site. But, aside from “optional” workers needed to expand, there are workers needed to remain at the current level.

Small businesses often have to lay off workers after a raise in the minimum wage, but not because they never needed those workers. They now have to cut back on store hours, close a branch if they are bigger and have more branches, sometimes they lay off everyone and go out of business….” — liberty

“business owners are hiring workers they don’t need, because they only have to pay them 5.15 an hour, and will not need them if the minimum wage is raised to 8.00 an hour.”

I just hired two temporary workers that I could do without, but who will make my life easier for the next few months. I am paying them $7 per hour, which is above minimum wage. I offer a little above minimum wage in order to compete for workers who will do this same job for minimum wage. At $7 per hour, my experience is I get workers who appreciate they are getting more than most people pay for the same job, and so they work harder than most to keep it.

If minimum wage was $8 per hour, I either would not have hired them, or else I would only have hired one. This is not because I couldn’t afford $8 per hour, but because I would have had to offer $10 or $11 per hour to find decent help.

And the bottom line is, if either of these two temporary workers show a high level of aptitude for the job, I will keep them on permanently and they will make much more than $11 per hour.

Minimum wage is a floor. It ain’t a bed.” — President_Friedman

When politicians tamper with the free market for political reasons, it seldom works as expected. In fact, over time, the drawbacks are usually greater than the benefits. That would surely be the case with the minimum wage.

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