Inclusive Growth

The minimum wage should be eliminated

Advocates of a higher minimum wage claim that raising the minimum wage helps low-wage workers. Opponents point out that if government makes it illegal to hire an employee for less than a certain amount per hour, there will be fewer job opportunities for those who lack skills and experience: a higher price creates lower demand - econ101. Most debates focus on how the minimum wage affects workers. Who is discussing how it affects business people, especially start-up entrepreneurs, which is an issue of basic fairness.

 

Visualize a stay-at-home mom, let's name her Judy, wanting to open a bakery. Judy must take huge financial risks by paying upfront to hire and train staff, buy baking equipment and decorate her store. Judy will likely have to take on a lot of debt and will only succeed if she can make enough money to cover not only her operating costs but also her initial costs. About 50% of new business ventures fail in their first five years. Judy will have to work like a dog, knowing that if her business fails, she may lose her home if that’s what it takes to pay back her lenders.

 

One strategy Judy can take to keep her costs low is to hire some teenagers at $8/hour to help work the cash register, haul supplies, and assist bakers. She prefers to hire several employees who are only looking for temporary work, because she cannot afford to commit to too many permanent employees until she has a steady customer base. There is no shortage of teenagers who are happy to work for a small wage for some work experience and extra spending money. If Judy initially offer such jobs for $5/hour and no one accepts, she will have to raise the wages offered until she can find enough people who agree with her that the work is worth to them what she offers to pay. For both sides, it’s a win/win trade, or else the trade never happens.

 

Then the government says the minimum wage must be $15 per hour, making Judy’s business strategy illegal. It is hard enough to start and run a business without having your government prevent you from hiring employees for wages they are willing to accept. Judy's choice s are then to hire a smaller number of higher value and more experienced employees or increase automation so no hiring is needed.

 

The minimum wage debate is in part a debate over whether entrepreneurs like Judy should be forced to shoulder burdens imposed by others - unchosen burdens that are not fair. By ignoring what the minimum wage law demands from Judy, we are treating her not as a equal human beings with rights, but as a servant who must obediently carry whatever additional weight is given to her. Judy's judgment, her career dreams, her life, why doesn’t she matter? People would rightly be outraged if the rights of Judy's employees were so casually ignored, but there is no outrage over the unfair treatment of entrepreneurs like Judy.

 

This proposal would not only drastically decrease youth unemployment and enable unskilled immigrants to gain a foothold and human dignity and self-esteem from a first job, but it would improve social justice and equity by ending the unfair treatment of entrepreneurs like Judy and allow small businesses to flourish.

Tags

Voting

-61 votes
5 up votes
66 down votes
Ideate
Idea No. 187