Throughout history, people have tried to alleviate the burden of the poor. In the many different government systems, the poor or working class has been on the forefront of most government’s minds. Free-market capitalism has created a system to move between the classes with enough hardwork and dedication. It has also allowed for the poor to take care of themselves, because of the ease to find work. Minimum wage has trampled on the principles of capitalism and has eliminated the ability to find work, and therefore has eliminated the ability for the poor to provide for themselves. Without question, minimum wage has been a major deterrent in the economy, but several want to even expand on this regulation. This should not happen, in fact it should be completely eliminated. The government regulation of businesses through minimum wage should be forever eliminated because it creates monopolies, increases unemployment, and sets an unfair bias in the private exchange of services.
Franklin D. Roosevelt, throughout his presidency, established several new programs, laws, and regulations under the program called the New Deal. The New Deal was created to boost the American economy out of the Great Depression. Several of the programs under the New Deal still affect Americans today. Social Security, Federal Housing, and the Minimum Wage were of the biggest and longest lasting programs. Minimum Wage was passed under the Fair Labor Standards Act, which forced employers to pay their workers a minimum of $0.25 an hour. This Act was passed in 1938 as a means to enhance the earnings of already poor workers due to the Great Depression. According to the Bureau of Labor Statistics in 2015 approximately 2.2 million workers, over the age of 16 were paid under minimum wage to minimum wage. That is 2.6% of the labor force. Of that number approximately 50% of earners are still in high school. The minimum wage increased several times and most recently increased to $7.25 an hour under President Obama. Counties, cities, and states are allowed to establish their own minimum wage as long as it is not lower than the Federal Minimum Wage. There are several cities, including the United State’s capital that have increased the minimum wage to $15 an hour. This was in response to a large and growing movement calling for a “living wage.” There is are not many Representatives asking for a total repeal of minimum wage.
The Bible makes clear that if someone trusts in God, He will provide for them. It is very unfortunate that approximately two-thirds of Americans claim to be christian, yet they rely on the Government to provide for them, not their own creator and savior. King David writes in Psalms, “I am the Lord your God, who brought you up out of the land of Egypt. Open your mouth wide, and I will fill it.” (English Standard Version. Psalms 81.10). There is no other interpretation for this verse other than God will provide. This means two things; first, christians do not need Government to provide assistance to them and second, because Government will not provide, christians need to step up and help poor and needy. Christians and the church need to show that the poor can be provided to without the government. This is a big role for christians, but it is also a commanded one. Christian must follow in the footsteps of Jesus and he most definitely proved to the sick, poor and hungry. Christians should joyfully provide, after all as it says in 1 Chronicles the money is not our own. “But who am I, and what is my people, that we should be able thus to offer willingly? For all things come from you, and of your own have we given you.” (1 Chr. 29:14).
Argument #1: Minimum Wage Hinders Small Business and Creates Monopolies
When minimum wage was created, the goal of the program was to ensure workers get paid their fair share. There were immediate downsides, like business unemployment reaching the highest it’s ever been the year minimum wage was passed. As the minimum wage increased through several laws, the number and the amount of consequences have also increased. One of the major consequences of the minimum wage is its hindrance of small businesses and the creation of monopolies. The government regulation of businesses through minimum wage should be forever eliminated because it hinders small business and therefore creates monopolies.
The minimum wage hinders small businesses. It is very difficult to run a small business and expect nothing to go wrong. In the article, “Financial Problems That Small Business Enterprises Face,” author Ellis Davidson describes the struggle small business owners go through financially, “small businesses frequently run close to the bone and may be profitable only so long as unplanned events never occur.” (Par 3). The author later goes on to say that avoiding unplanned events are nearly impossible. In an economy without minimum wage, the profit a company would make would be enough to cover unexpected incidents. But with a minimum wage it is a struggling to find enough money simply to run without unexpected incidents.
Since minimum wage increased companies have had to make a choice. The small business could cut the amount of workers on their staff, which will mean less productivity, ultimately leading to less product, and therefore a lower cash flow. The small business could also cut the amount of supplies they purchase, which means less product being offered, leading to lower cash flow. Or the business could raise prices, which will decentives consumers to shop at the store, obviously leading to less cash flow. This is all made clear in the article “Minimum Wage Laws Are Immoral and Harmful” written by Ari Armstrong. This article explains what happens to small businesses when the minimum wage is raised, “…businesses must either scale back their operations or pass along the costs to their customers.” (Par 6). Because the business has to pay their employee more money, the business becomes less profitable.
Another way minimum wage hurts small business owners are the effects it has on new and young employees. Minimum wage not only directly hurts a small business monetary, but also its productivity because of a workers job training. Minimum wage makes it less likely for an employer to give a raise, as the employer cannot afford one. This means when a worker is being trained for a low wage job there is no incentive to finish the training, because there is no reward waiting. Traditionally, a business could offer lower wages until the training is finished and after offer higher wages. The lower wages would make up for the lost productivity in the short training period and the higher wages would be an incentive to work hard in the training and learn as much as one can so that the business would offer better wages for his skills. (Welch, Par. 22).
Finally, the government regulation of business through minimum wage creates monopolies. Government regulation is the main source for the creation of monopolies. It is the main source, because of its harmful regulations on the market, including minimum wage. Congressman Ron Paul, who represented the state of Texas for over 20 years, wrote in the article describing how the government creates monopolies, “Blame Government, Not Markets for Monopoly” “…laws making it difficult to launch a “hostile” takeover promote inefficient use of resources and harm investors, workers, and consumers. Monopolies and cartels are creations of government, not markets.” (Par 4). In regards on how specifically minimum wage creates monopolies, because of the less cash flow business have due to minimum wage, they are unfortunately forced to close down. Just because small businesses close, does not mean all businesses close. Large, already established companies can stay open, because they can afford the hit, leaving soley big corporations that can afford the minimum wage hike. Large corporations without competition are monopolies. The Institute, Employment Policies, gives a description of small businesses struggling with minimum wage in their paper, “Face’s of $15”. “When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses.” (Par 3).
Small business simply cannot afford the major harm minimum wage puts on them. Many times they will have to go out of business leading to monopolies. These are one of the biggest and longest lasting effects the minimum wage will have on this economy. This consequence was not foreseen when it was passed, but after seeing its harm, it is hard to imagine why this regulation is still around.
Argument #2: Minimum Wage Increases Unemployment
In the 1930s, the United States had a massive unemployment problem. In the height of the Great Depression unemployment reached the most it has ever been in United States history, and will ever be to this date. Franklin D. Roosevelt attempted to move America into the economic powerhouse as it has been in the past. There is a great debate whether he prolonged the Depression or successfully led America from it. The evidence seems to point to him prolonging the Depression. One of the major factors is the minimum wage. If minimum wage hurt the economy when it began at $0.25, imagine the effect of this policy $7 later. The biggest effect is it increases unemployment, leading to less productivity. The government regulation of businesses through minimum wage should be forever eliminated because it increases unemployment.
The idea minimum wage would harm the economy is not a new one by any means. Government regulation has been looked down upon by throughout many cultures, but the modern ideas are in laissez-faire capitalism. The term laissez-faire was used nearly 200 years, meaning ‘let go’. The idea was to have the government, (or monarchy at that time) leave the market to its own devices, as it would do much better without the government intervening. Laissez-faire presents the idea that not only less government involvement betters the economy, but also government involvement greatly hinders the economy. This is very true for the minimum wage. The idea that government should control the wages of a company is a fundamentally flawed idea. With less money for companies they will have to lay off workers meaning unemployment automatically increases. If unemployment increases obviously so do the amount of people without money, and therefore cannot participate in the economy. With less money in the economy overall, businesses have to cut more workers and the cycle continues. The minimum wage seeks to help the poor, but ultimately does the opposite. Minimum wage puts those it tries to help on the street.
This is not just theory. Minimum wage logically does not work, but the real world numbers back it up. Seattle increased their minimum wage to $15 an hour and immediately this harmed the worker and employment. In the article How Seattle’s Higher Minimum Wage Hurts Those It’s Meant To Help” the author looks at the minimum wage increase in Seattle when it increased to $15, “We conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9%” (Par 3). The minimum wage is not just an American issue, its effects can be studied around the world. Europe also has a minimum wage and it is equally as detrimental to employment. In the article “The Economic Impact of Minimum Wages in Europe” author Juan Dolado argues minimum wage increases unemployment. “Relative to average wages, minimum wages have not risen in Europe over the last 30 years; they caused higher unemployment only if they prevented a necessary fall in the wages of the low paid.” (Par 23).
The minimum wage is harmful to the worker overall. No one can argue, it will not help the one person lucky enough to keep his job, but his luck is at the detriment of thousands of now unemployed individuals.
Counterargument: The Fight for $15
Finding information and arguments for support of the minimum wage is can be done so with ease. In fact, in today’s United States one of the most prominent and growing movements is called The Fight for $15. This movement argues that the minimum wage should increase to an amount that would support a person’s basic necessities including food and housing. Not only do millions support this, but recently the ‘living wage’ has gotten a major political party’s support. In the Democratic Party Platform the living wage is advocated for, “Democrats believe that the current minimum wage is a starvation wage and must be increased to a living wage.” (“Raising Workers Wages” Par. 1).
The main argument that will be seen is ‘workers rights.’ This phrase shows up several times while examining the literature for support for a $15 minimum wage. Supporters believe a worker has a right to earn a wage that can support himself and it is the government’s responsibility to maintain this right. Although no where in the Constitution it is stated someone has the right to a living, supporters believe the government has an unspoken responsibility to maintain those rights. Those arguing in favor of a $15 minimum wage will use terms like ‘social contract’ to say the government has this responsibility. The term social contract comes from English philosopher John Locke. Locke’s idea was that in exchange for some human rights, the government could protect the people. An example of this would be taxes and the military. The People give up their right to keep their full wage and give a portion to the government in exchange for protection from militant enemies. Similarly, proponents of the minimum wage see the social contract as the the worker giving up his right to time and is contributing to the economy, the government protects them by providing an appropriate wage. In the article “Is There a Moral Case for Raising the Minimum Wage” the author argues that the government needs to provide for families, like a social contract.
Most of those who work 40 hours a week at the minimum wage or near it and are supporting families believe that they are entitled to food and housing, the fact is that they are doing what we have long believed was fulfilling our basic social contract—work hard, be productive, and you and your family can live a decent life with a place to live, food on the table, clothes on your backs, and other necessities. (Par 6)
A counter argument to this would be the minimum wage ultimately harms those it tries to help, thereby cancelling out the benefits it seems to give.
Argument #3: The Minimum Wage Sets an Unfair Bias in the Private Exchange of Services
It is more efficient for the employer and the employee to set the wages of a service, rather than the government, a third party, to set a nationwide minimum. The government should not control the amount a private individual pays another individual for a service. The worth of a service should be determined by the person paying the individual. The government has determined it has the right to decide the worth of a private citizen. This is unfavorable for the party determining the worth of the other. The government regulation of businesses through minimum wage should be forever eliminated because it sets an unfair bias in the private exchange of services.
A wage assigns value to the work of an individual, and therefore, in our capitalist society it gives value to said person, a worker. In the capitalist system, everything has a price tag, including the worker. A worker’s value is determined by his productivity. If a worker does not produce enough to add value to a corporation, he will not be hired; however, if he produces enough to enhance the corporation he will be hired and paid accordingly. In this circumstance, corporations determine the value of the worker on a personal level. His value is based on the productivity he brings to the table. Each individual determines the value of the other, and allow this to happen. When the government determines the value of the worker, it does so without the permission of the worker or consideration of unique circumstances in the agreement of worth. The government infringes on the interaction of the two parties determining the value of each other giving the worker an automatic advantage. In the article “9 Reasons Why Raising the Minimum Wage is a Terrible Idea” author Ira Stroll from the group Reason gives an outstanding explanation on why government intervention is immoral, “If someone wants to work for $5 an hour, and someone wants to hire that person for that much, and no one is forcing either one of them to enter into the agreement, by what authority does government step in and stop them?” (Par. 6 Stoll). Minimum wage is a detriment to human interaction and contract. The government has decided the worth of an worker, rather than allowing capitalism to do so.
Not only is minimum wage unfair to the corporation, but it is also a hindrance to the worker. There are two factors that determine the value of the person; the first was what the corporation was willing to pay the worker, but the second is the value the worker gives to himself. If a worker has determined his value is a certain amount and the corporation offers less than that value, the worker can simply go somewhere else. To be competitive in the market, the worker has the ability to undercut his value to incentives the corporation to hire him, rather than another worker. The government takes away the ability to do this, by saying all workers have the same value, the minimum wage.