The minimum wage tug-of-war
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by Tyrsis
Yesterday, Congress passed a bill halving the minimum wage to 1 USD. Joeph Cole, the pioneer of this bill, claimed that this was the minimum level he was allowed to propose. If this is true, then USA is at the forefront of an efficient and competitive labour market in comparison to the world. It means that our economy will not be capped in its capacity to produce cheaper raw materials and products, as cuts in labour costs are transferred to the consumer via market competition.
However, today a new bill has been proposed, to triple this limit to 3 USD. I fear that this will displace some workers.
Liberty and Prosperity has already written two previous articles on the minimum wage, educating citizens of its failure to achieve its intended effect. If it is truly designed to help the poorest of our nation, then a minimum wage prevents the unemployed from competing with the employed. If anything, it is unfair to the worst off in society.
A minimum wage law only serves to perpetuate unemployment and inflation, as firms must increase their prices to sustainably pay workers more. This increase in price will lead to a decrease in the quantity of products demanded, and hence, a decrease in the number of employed workers. Combine this with the fact that unemployment and inflation will hit the poorest the hardest, and a minimum wage is simply a recipe for disaster. Instead of helping who it intends to serve, it ends up brutally smashing their hopes and dreams.
Let's hope the Congress doesn't change its mind on this one. If you are a worker who may be displaced from this minimum wage law, please contact your representative and ask him to vote "NO".
Stay tuned, Liberty and Prosperity plans to make a report on free trade in the near future.
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Comments
I disagree. In fact, I will ask my congressman to vote YES on this proposal to stop companies screwing over people who are just starting off.
I totally disagree. All of the claims posted in this article is nonsense and based on outdated literature .
What he proposes is wild capitalism.
Laissez faire et laissez passer
i just wish RL US understood that...
Exactly where and how do the claims in this article fail?
If it is truly such nonsense, then please highlight the flaws.
All the proponents of high minimum wage fail to recognize the reality that companies are paying more than they ever have, especially in raw materials. You can get paid $5-10 with no skill in any RM sector.
"You can get paid $5-10 with no skill in any RM sector."
Come on, Emerick. You know very well that this is a temporary anomaly that will phase itself out when supply meets demand and prices for RMs go down. Give it another month and the raw mats market will be over-saturated. At that point the competition will kick in and RM companies (trying to undercut one another) will lower the wages to something closer to reality. You can already see this trend starting to happen on the HR market. Another month later, and minimum wage for a 0 skill will be the norm.
At the same time the market for goods will stabilize as well, and the days of .02 USD food and .5 USD gifts will be long gone. It is at that point that the new citizen will not be able to afford to keep up their wellness on a 1 USD per day salary.
Actually, with the exponential nature of the productivity equation, you can pay a 2 skill RM worker $10, and still make profits selling for $0.30. When people get higher land skills, they'll only produce more, so RM GM's can afford to take a hit by paying low skilled workers more than they're worth, because they'll be worth so much more in just a week.
Exactly Emerick. Many haven't figured this out yet... that is why companies(including mine) were able to pay such high wages starting out.
"that is why companies(including mine) were able to pay such high wages starting out."
In that case, what is exactly so horrible about a minimum wage of 3 USD? If a company is making an investment into workers' potential, why would they be opposed to a MW of less than a third of what they are willing to pay for a citizen with no skill?
Well, you're making the assumption that businesses are anti-minimum wages.
A lot of them probably aren't. Let's dispel the belief that free-market capitalism is a 'tool' for the rich, because I am one such example. A working class man who favours free-market capitalism, because I recognise that it gives me more choice.
I recognise that such a MW is not binding, but if it were, then it would be potentially harmful, because it would restrict the right of the unemployed from bargaining (their wages downward) with an employer to get a job.