American Elephants

Misunderstanding the Minimum Wage. by The Elephant's Child

Why is it so hard for people to understand the minimum wage? Advocates of a higher minimum wage are always those motivated by the concept of “fairness,” and  fairness is the reason such laws have been enacted at all.

Advocates assume that the minimum wage must support a family. That’s not what the minimum wage is supposed to do. The minimum wage is supposed to be a place to begin. It’s not supposed to “raise people out of poverty” nor is it supposed to support a family.

There are raw beginners. They don’t know how to answer the telephone, sweep the floor, speak to customers, pick fruit quickly so it doesn’t bruise, use a cash register, wash windows. There are all sorts of simple tasks that must be done a certain way in a specific workplace, that high school graduates don’t know how to do. Someone must give up their usual work to teach the beginners what is required. Statistics show that the average person on the minimum wage is promoted within six months. In a period of six months, or sooner, a beginner should become a reasonably efficient worker needing much less supervision.

There was a time when internships were available, and when businesses could offer brief unpaid internships to give a beginner a chance to see what a business was like. Many people got their start by convincing a business to allow them to volunteer to work for free, fetching coffee or mopping floors just to learn. That is no longer legal.

Obama’s own adventures with job-training programs are a case in point. The government sponsored programs to train people to insulate houses and save energy. The assumption was that since some people did not have well-insulated houses, the reason was a lack of people who did such work. Most communities already had such businesses, but not everyone was ready to pay for the upgrade. There was not enough business for existing employers to add more workers, even with a government subsidized  discount. The program was a failure, and poorly trained beginners could not get jobs.

When the minimum wage is reasonably low, people are willing to teach beginners how to do a job. When a beginner is a capable worker, he can take his new-found skills elsewhere if they are not rewarded in the current job. When the minimum wage is high and the government adds on the cost of health care benefits, businesses find a way to cope by employing fewer people, installing more automation, employing outside services instead of an employee, or hiring more part-time workers, or simply giving up and going out of business.

The left assumes that to lift poor people out of poverty, you have only to force employers to pay them more.  A simplistic idea that sounds good, but doesn’t work. Those who have less potential as beginners are not hired at all.  Fewer beginners are hired, and it is harder for the new worker to get any kind of start, and poverty increases.

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“Many people got their start by convincing a business to allow them to volunteer to work for free, fetching coffee or mopping floors just to learn. That is no longer legal.”

Is that really the case? I’m asking because I don’t know. My son managed to get a one-week internship in a big computer-chip manufacturing firm while he was just a sophomore in high school. True, all they had him do was observe what other employees were doing.

In Europe, unpaid or minimally paid working internships are common. Lots of college students seem to gravitate to internships (unlike my generation, which sought out paying jobs) during the summer. Some of these are non-profit organisations, but I thought that some of them were for companies, too. Are they all required to be paid at least the minimum wage, no matter how short a period they’re employed?


Comment by Subsidy Eye

I probably should have added “I think”. Something has transpired because I have read that the administration has eliminated a lot of previous intern possibilities. I couldn’t remember exactly what I read nor where, and was too lazy (it was late) to do a search. And that it was a Obama administration change.


Comment by The Elephant's Child

Sorry, meant to write, “Lots of U.S. college students seem to gravitate to internships (unlike my generation, which sought out paying jobs) during the summer.


Comment by Subsidy Eye

Statutory minimum wages were also proposed as a way to control the proliferation of sweat shops in manufacturing industries. The sweat shops employed large numbers of women and young workers, paying them what were considered to be substandard wages. The sweatshop owners were thought to have unfair bargaining power over their workers, and a minimum wage was proposed as a means to make them pay “fairly”.

To a conservative their are no distortions in the market place except what the government distorts. This thinking is just as delusional as liberals regarding hunting and the 2nd Amendment.


Comment by Mark Baird

The minimum wage is meant to give raw beginners a chance to learn how to work. When the minimum wage is raised sharply, it eliminates the least skilled from the marketplace. That is plain common sense. Don’t go off on a tangent arguing with straw men that were never in the words I wrote. We have had tons of laws passed to regulate the labor market, some good, some bad. If you do not have a place where those who don’t know how to work to start and get the instruction that they need to become useful workers, then they are sunk.

Those who are most deeply in poverty are apt to be those who dropped out of school, or those who are new immigrants who do not speak the language. The ladder to a better job isn’t very useful if you take out all the bottom rungs. Someone who learns basic skills, how to speak to a customer, how to mop the floor, clean the tables, wash the windows and can do those things without close supervision has marketable skills.


Comment by The Elephant's Child

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