We do not need polls, advice columns, or politicians sputtering, the economic data is compelling. When a minimum wage is imposed, it excludes the very members of the society that need a first job. Further, it treats employers improperly making them fund socialist benevolence via an unequal trade with their employees.
How so? Businesses take a product and convey it to customers. Done correctly there must be a profit so the process can continue. The employer trades money with employees for their productivity in this process.
If the value of the employee productivity is less than the money the employer gives the employee then there is an uneven trade. Both employer and employee must prosper for the relationship to continue. The employer must pay enough that employees can exist while employees must give employers enough productivity that customers are satisfied by quality and price.
Further, customers decide how much they will spend so prices must conform to customer behavior. Therefore, if the cost of the product including the cost of the employee productivity is more than the customer is willing to spend, the customer will not buy. Often businesses will fail. This is Economics 101.
So when the government forces employers to make a bad bargain of paying employees more than their productivity is worth one of two things will happen: the loss is passed on to the customer who is free to buy or not because the product costs more than it should. Customers are free to buy from any vendor so employers who lower the employee cost can lower purchase price.
The second thing is that some employers may mechanize to keep from paying more for the employees than the employees can deliver in productivity. This is an adaption many businesses have used because of the minimum wage laws. Currently, many low-skilled jobs have been mechanized or moved off-shore.
Know this: it is not the fault of the employee that they do not have the skills, knowledge and abilities to match the productivity requirements of the artificially imposed minimum wage. They are just starting out in the job market. Their first job is where they are supposed to develop these productivity skills. Raising the minimum wage only increases the disparity of wage to productivity and leads to more unemployment of young people.
Most importantly I am not turning Economics into Socialism where the needs of the workers are more important than sustainable financial transactions. Break that economic system and you get unemployment of the least productive members of society either by mechanization or businesses no longer being viable.
Should New Mexico raise the minimum wage? No, what New Mexico should do is improve doing good business in New Mexico by rejecting any wage controls including the minimum wage. Adam Smith’s invisible hand will lift up the low-skilled workers currently unemployed and unemployable because of the minimum wage. Nothing holds people into poverty like the minimum wage laws.
The big lie is that the minimum wage is necessary so that employers do not take advantage of low skilled workers. The problem is economics not employers. Let low skilled workers make an honest deal with employers to get into the job market. Businesses are already paying taxes to fund government benevolence so it is wrong to require businesses to directly fund the benevolence from the proceeds of their businesses.
Vote people into office who will fix this problem so our least productive citizens, mostly kids, can get the all-important first job and increase their productivity and therefore wages. And throw out the socialists in our government who are holding our citizens in poverty because of their need for political power.
Dr. Michael Swickard hosts the syndicated radio talk show News New Mexico six to nine a.m. Monday - Friday on a number of New Mexico radio stations and through streaming. Email: michael@swickard.com
