Once again the minimum wage is a hot topic, with politicians in Washington debating a raise (some want to push it as far as an insane $15 an hour), despite overwhelming evidence that this practice will only hinder the work-finding efforts of those it’s meant to help.
There is a vast misconception stoking the fires of the minimum wage movement – that it has to be raised to the ethereal “living wage” standard and that will help ease the woes of society, and somehow Quixotically boost employment. This couldn’t be more incorrect. Raising minimum wage simply prices jobs out of the market, causing escalating unemployment, stifling entrepreneurship and inspiring business owners to look at illegal labor as its only option. You either have one job instead of two, or zero jobs due to businesses not being able to afford a wage that would normally be paid to a skilled worker, not an unskilled position or someone just starting out. When I first started in my career I was paid $12.00 an hour, and that was working in a skilled corporate environment in 2003.
Rothbard’s take on this holds as true today as when he first stated it in “Making Economic Sense” in 1995.
In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.
I wrote about Sweden’s awful predicament previously, which looms in the near future for our country if we allow our ill-informed representatives to continually up the minimum wage. This excerpt is from the Wall Street Journal’s interview with Swedish writer and pro-immigration think tank member FREDRIK SEGERFELDT.
By sector-wide union agreements, the country has higher de-facto minimum wages than most of its peers, and so boasts fewer low-wage entry-level jobs than any other EU member.
As a consequence, the employment rate of Swedish residents born in Somalia, for instance, is a mere 25%; for Iraqi immigrants, it’s 39%. The same issue feeds into youth unemployment, which is also high in Sweden—though nowhere near the levels of Spain or Italy.
In Sweden as elsewhere in Europe, barriers against new economic entrants have produced ghettos of idle misery. Immigrants and under-30s aren’t starving or freezing, or even worried about whether their children can afford college. But too many of them have been priced out of a labor market that caters only to the skilled. They’re receiving benefits that are still way too generous, but their human capital and productivity can’t measure up.
Despite these blatant examples of the failings of the high minimum wage standard, politicians race to boost it in order to cull the cries from the masses, who have no concept of just how much they are hurting themselves with these policies.
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