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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