In his 1980 television series, Free to Choose, Friedman says, “The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills… The law says here’s a man who has a skill that would justify a wage of $5 or $6 per hour (adjusted for 2014), but you may not employ him, it’s illegal, because if you employ him you must pay him $9 per hour.”
Friedman continues, “So what’s the result? To employ him at $9 per hour is to engage in charity. There’s nothing wrong with charity. But most employers are not in the position to engage in that kind of charity. Thus, the consequences of minimum wage laws have been almost wholly bad. We have increased unemployment and increased poverty.”
There are a couple of studies in 1992 which are noted by people pushing minimum wage that found no change in fast food restaurants when the minimum wage went up. These studies have not been replicated and most of the rest of the hundreds of studies about minimum wage are clear that increasing the cost of production without increasing the ability to produce is a barrier to companies staying in business.
When the minimum wage was first proposed the effect on the least skilled workers was understood by those politicians. Only recently have the media been able to obscure these outcomes. The political opportunities were such that politicians and labor unions could prosper while the least productive members of our society paid a dreadful price.
The forces pushing a minimum wage never look at it like economists. What happens in minimum wage situations is the maximum unemployment of the least skilled member of our society. Why? Employment is dynamic and businesses cannot support paying for something not received.
Businesses could pay out money without a fair return for a while, but all businesses will end up bankrupt if they pay too much for labor without a resultant increase in productivity. Many businesses run on a skinny profit and changing the labor costs without changing the productivity of workers will cause businesses to fail.
The minimum wage debate is almost entirely from the side of the person without adequate productive skills. That person must exist on very little money. I worry about someone else. What about those least skilled citizens who do not have a job and cannot get one? They are now less likely to be employed.
This is especially so for young people who have never had a job. Getting that first job is a problem because they have no job history and unless they come from a technical high school or college, they do not have the productive skills such that the employer can make a fair trade.
So most of these young people sit at home, mostly in their parent’s home and they do not gain skills while the politicians and unions talk about raising the minimum wage even higher. Alas, the unemployed cheer for a higher minimum wage without realizing a higher minimum wage puts jobs even further out of their reach.
The government likes a minimum wage increase for three reasons: it pushes all wages higher thereby increasing employment taxes for the government. It likewise increases Social Security and Medicare taxes and it increases the need for government to help those poor young people without a job.
The label on all of this is fairness but it is one-sided. It only looks at those people receiving, not those people paying. It does not look at those people who must be laid off or are never hired. Finally, it does not look at the businesses that will close because their razor thin profit margins become a loss.
The unemployed have a much harder road to live than anyone employed.
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
There are a couple of studies in 1992 which are noted by people pushing minimum wage that found no change in fast food restaurants when the minimum wage went up. These studies have not been replicated and most of the rest of the hundreds of studies about minimum wage are clear that increasing the cost of production without increasing the ability to produce is a barrier to companies staying in business.
When the minimum wage was first proposed the effect on the least skilled workers was understood by those politicians. Only recently have the media been able to obscure these outcomes. The political opportunities were such that politicians and labor unions could prosper while the least productive members of our society paid a dreadful price.
The forces pushing a minimum wage never look at it like economists. What happens in minimum wage situations is the maximum unemployment of the least skilled member of our society. Why? Employment is dynamic and businesses cannot support paying for something not received.
Businesses could pay out money without a fair return for a while, but all businesses will end up bankrupt if they pay too much for labor without a resultant increase in productivity. Many businesses run on a skinny profit and changing the labor costs without changing the productivity of workers will cause businesses to fail.
The minimum wage debate is almost entirely from the side of the person without adequate productive skills. That person must exist on very little money. I worry about someone else. What about those least skilled citizens who do not have a job and cannot get one? They are now less likely to be employed.
This is especially so for young people who have never had a job. Getting that first job is a problem because they have no job history and unless they come from a technical high school or college, they do not have the productive skills such that the employer can make a fair trade.
So most of these young people sit at home, mostly in their parent’s home and they do not gain skills while the politicians and unions talk about raising the minimum wage even higher. Alas, the unemployed cheer for a higher minimum wage without realizing a higher minimum wage puts jobs even further out of their reach.
The government likes a minimum wage increase for three reasons: it pushes all wages higher thereby increasing employment taxes for the government. It likewise increases Social Security and Medicare taxes and it increases the need for government to help those poor young people without a job.
The label on all of this is fairness but it is one-sided. It only looks at those people receiving, not those people paying. It does not look at those people who must be laid off or are never hired. Finally, it does not look at the businesses that will close because their razor thin profit margins become a loss.
The unemployed have a much harder road to live than anyone employed.
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
