Political Reform

The Minimum Wage Debate

How do we help the poor get higher wages?

Raising the minimum wage in order to help the poor won't work.  The reason is that you are only treating the symptoms of the problem, and not the root cause.  Think how stupid the doctor would be, if you went to the emergency room experiencing chest pain on the left side, and shortness of breath, light-headedness and nausea, and the doctor decided to treat your symptoms by giving you pain killer, and anti nausea medicine.  The symptoms above are all consistent with a heart attack.  The doctor needs to diagnose the root cause of your symptoms and treat it, or you are likely to die.

The same thing is happening with low wages.  People have low wages due to being affected by one or both of the following root causes.  Low skills, and/or low numbers of jobs available compared to the number of job seekers.

If you raise the minimum wage in an attempt to solve the problems of low skills or a bad economy then the actual effect will not be to raise the standard of living of the poor.  All you will do is change which symptoms they experience.

Instead of low wages, many people will experience unemployment instead.  You may also experience economic slowdown or even recession.  Inflation due to rising prices is another possibility.  Employers may also shift jobs away from a large number of low skilled jobs, to a low number of high skilled jobs by investing in automation equipment.

When the minimum wage was increased in Samoa in 2009 unemployment jumped from 5% to over 35%.  Raising the minimum wage did not result in an increased standard of living, or an increase in economic activity as many proponents claimed.  It resulted in a decrease.  The very people the law was intended to help were hurt instead.

Lets also not forget that the minimum wage was originally passed as a Jim Crow law, intended to keep blacks and other minorities out of the work force so they couldn't compete with white union members.  The reason that racists love the minimum wage law is that despite what they may say about it in public, they know it discriminates against the poor, who are mostly minorities.

The minimum wage law was never intended to help the poor.  It was intended to hurt the poor. (blacks and immigrants) The group that the law is intended to help is unions, and middle to upper level hourly employees.  If you have good skills, or if you are a member of a union that indexes your wages to the minimum wage, then raising that minimum will get you more money.  But if you are in that group, you weren't really that poor to begin with, and didn't really need the help.  

The people that most desperately need help are the 92 million people who are not working at all.  And these are the very people that the minimum wage was originally INTENDED to hurt.  So why does anyone think that the law will now magically do the opposite of what its original framers intended it to do?

Let me repeat that.  The minimum wage law was originally passed with the intention of hurting unemployed people, people with very low skills and those with a poor education.  The reason that racist legislators did this is because African Americans and immigrants traditionally fit that description.  So by discriminating against these groups, they were mostly discriminating against blacks and immigrants such as the Japanese.  This discrimination is exactly what they wanted.

So how do we solve low wages if we can't use a minimum wage law to do it?  Read on, and I'll show you.