More thoughts on the evil that is minimum wage

So my acquaintance on a social site responded to my post, “The minimum wage is immoral” with, the DNC talking point, “Well, I wish corporations weren’t evil profit machines that treat employees like dirt. The day corporations are no longer evil is the day government will not need to enforce minimum wage.”

The more I turned that nonsense over in my mind, the more I wondered who these “evil profit machines” are.

Contrary to the rhetoric of organized labor and its allies, the vast majority of people earning the minimum wage aren’t working at large corporations with 1,000 or more employees. Roughly half the minimum-wage workforce is employed at businesses with fewer than 100 employees, and 40% are at very small businesses with fewer than 50 employees.

Michael Saltsman: Who Really Employs Minimum-Wage Workers? – WSJ

So, it turns out that ANYONE who owns a business is an “evil profit machine,” and needs to get soaked because they don’t care about their employees and treat them like dirt, I guess.

In March each year, the Census Bureau conducts a special survey of many of the same U.S. households that make up the monthly jobs report. Respondents are asked about the size of the company they work for, and the responses are then sorted into six categories ranging from fewer than 10 employees to 1,000 or more.

Here are some actual data to chew on:

  • “Roughly half the minimum-wage workforce is employed at businesses with fewer than 100 employees, and 40% are at very small businesses with fewer than 50 employees.”
  • “from minimum wage employees earning $7.25 an hour to “low-wage” employees earning $10 an hour or less: 46% still work for businesses with 100 or fewer employees.”
  • “the stark economics these small-business owners face: single-digit profit margins, extremely price-sensitive customers, and no room to absorb a substantial increase in the minimum wage without dramatically reducing the cost of service.”
  • “the median profit margin at an independently owned fast-food restaurant is 2.6%”

So, really, what the people who are demanding higher minimum wage are demanding (as an unintended consequence) is that many small businesses disappear only to be replaced by large “evil profit machines” that have the resources to replace low skilled workers with automation…. Your compassion is killing me.

The minimum wage is immoral

The Moral Argument Against the Minimum Wage, by Douglas Groothuis

The minimum wage is immoral. To understand why, we must first explore its social and economic dimensions. Socially, the minimum wage is a type of social contract. Two parties, the employee and the employer, are involved in negotiating a contract over labor and compensation. The negotiation isvoluntary in that the employer is not being forced to hire any specific person and the employee is not being forced to work for any particular company, andconsensual in that both employer and employee mutually agree to the terms and conditions of the labor contract. Within the philosophy of social contract theory, one’s moral obligations are relative to the contract that is agreed upon. In this case, once the contract has been signed, the employee is morally bound to fulfill their work responsibilities, and the employer is morally bound to compensate them for their labor (through wages, medical benefits, vacation time, paid time off, sick leave, etc.). If either side fails in their duties, the contract can be broken; the employer has the right to fire the worker or the employee can look for work elsewhere.

Read the whole thing. It is important.

How the minimum wage is the very worst thing to do for low skill workers

“McDonalds and the minimum wage”

The effects fall heaviest on low-skill teenagers, especially minorities. Tom Sowell is eloquent on this point, for example in a recent New York Post OpEd. I was unaware until reading it that minimum wage laws were initially backed in part as conscious efforts to discriminate against minorities and preserve jobs for white people. Sometimes, I guess, policies do have their intended effects.