“The economic folly of the living wage/minimum wage nonsense is as plain as day to anyone with eyes to see.” – Mark Hendrickson, “Is The Federal Minimum Wage Unconstitutional?” The Blaze, February 5, 2016.
As socialism tragically surges in popularity among the American People, calls for a mandatory minimum wage become louder and more fanatical. Proponents claim that setting a minimum wage helps workers and, thus, the general economy. In truth, a mandatory minimum wage is one of the most damaging economic policies ever devised. More importantly, a mandatory minimum wage is immoral and unconstitutional. This article explains why a mandatory minimum wage is not only economically hazardous, but unethical and unconstitutional.
Economics 101 dictates that the entire concept of a mandatory minimum wage is anathema to economic growth. A set minimum wage leads to economic ruin, not growth. This is common sense. One need only apply basic logic to the question to uncover why a minimum wage can only harm an economy.
A mandatory minimum wage establishes the minimum salary an employer may legally pay his workers. What happens when a business cannot afford to pay all of its workers the increased mandatory wage? Three basic things can happen in this scenario: 1) The business will fire some of its workers because it cannot pay them; 2) the business will close its doors because it cannot meet its obligations; or 3) the business will raise its prices to cope with the sudden mandatory increase in wages, thus shifting the burden to the consumer.
The first two scenarios result in more people being out of work. A person out of work earns $0 an hour. By my calculations, zero is less than $7.25 (the current federal minimum wage) or any other alternative amount. For those fired because their employers cannot afford to pay a mandatory minimum wage, the concept is nothing short of disastrous.
Some of the laid-off workers will of course find new jobs. However, others might be forced to move to another city or commute longer distances, thus burning up more resources for gas, car maintenance, etc., and wasting precious time. And still others might end up on government welfare living off of the tax dollars of other American workers, placing an unnecessary and unfair burden upon them.
At any rate, dictating a minimum wage turns upside-down the lives of numerous people and businesses – the exact opposite of what proponents claim will happen. And even in the best-case scenario noted above, the customers suffer by paying more for their goods. The New American reported in 2016:
“Employment data now coming in from six U.S. cities that have mandated increases in the minimum wage are proving a basic economic law: When the price or cost of something increases, less of it will be demanded.”
Naturally, many customers will stop shopping at these establishments because they cannot afford it. This leaves the businesses in a bind and much more likely to close or downsize. As The New American stated, this is a basic economic cause-and-effect law. It is economics 101. No minimum wage decree can or will work (and, as will be discussed later, it is immoral to mandate one).
Sometimes people support a minimum wage hike because they have fallen for the propaganda that “the 1%” have plenty of money and just aren’t sharing it with workers who “deserve it.” It is a common fallacy to believe that businesses have lots of extra cash just lying around that they could give their employees if they weren’t so greedy. Not so. A 2015 report noted that “the majority of small businesses in the United States barely break even. Out of 28 million small businesses in the United States, 22 million are breaking even. That’s right. Only 6 million of the small businesses in the United States are profitable.”
How are these small businesses – the backbone of our economy – going to pay their employees so much extra money if they are already barely breaking even? The reality is that they will not be able to. They will, as noted, close, downsize, or dramatically raise prices. It’s a no-win situation.
Restaurants Unlimited, a national restaurant chain based out of Seattle, filed for bankruptcy this July, citing as a major factor minimum wage laws. This development came on the heels of the company closing six of its restaurants. In its statement, the company blasted minimum wage laws: “Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage.”
In Emeryville, California, a 2015 minimum wage mandate has similarly wreaked havoc on the local economy. A recent news report stated:
“The ‘Fight for $15’ campaign blazed through Emeryville in 2015. While even activists expressed contentment with the adoption of a regional minimum wage model that established a ‘path’ to $15, the then city council pursued its highest-in-the-nation ‘living wage’ model.
“They argued that this would reduce poverty levels by eliminating reliance on government programs, low-wage earners would be able to live closer to their jobs and an economic ‘multiplier effect’ where these earners would offset any loss in business by contributing back to the local economy.
“Supporters dismissed threats of job loss, impact on youth employment, reduced shifts and increased automation as ‘bluff’ by business owners. . . .”
The article cited a recent study from the Mills College Lokey School that “confirmed” the fears of those initially warning of the detrimental effects of the wage hike. While some new businesses have opened in Emeryville since the law went into effect, many have closed while those that remain have been forced to increase prices. Many consumers have altered their spending habits to offset the price increases brought on by the minimum wage laws. And of those new business that have been fortunate enough to open, the report stated:
“It’s notable that nearly all the new businesses that have opened have embraced the counter service model that requires fewer employees . . . Counter service models require fewer employees to offset higher labor costs.”
A final statement revealing what minimum wage increases do to the finances of a business is noteworthy:
“One of the most outspoken full-service restaurants has been Townhouse General Manager Jeffrey Kroeber. Kroeber has warned the council for years that the wage scale was unsustainable for his business and that every $1 increase led to a $200,000 increase in their payroll. A payroll increase that would have to be offset by a $650-$700K increase in sales to maintain margins. “If we don’t have a profit margin that makes it viable for us, we’ll leave,” he explained.”
A Forbes report from 2017 documented numerous businesses that have closed due to minimum wage increases. Some of these businesses include Almost Perfect Books in Roseville, California, Abbot’s Cellar in San Francisco, and Del Rio Diner in Brooklyn, New York. Other businesses mentioned were forced to flee high minimum wage states like Washington and California for states with low minimum wage. One wonders where they will flee if a federal minimum wage increase comes down the pipe.
The Forbes article also noted that the Service Employees International Union (SEIU), the fastest-growing union in North America, had at that point spent $90 million on propaganda supporting a $15 minimum wage mandate. Isn’t it interesting that a union, a group supposedly created for the benefit of workers, supports an economically ruinous policy like a mandatory minimum wage, and that it is willing to spend $90 million to persuade people it is beneficial?
Isn’t it also interesting that the Communist Party USA was known to have infiltrated the 1199 New York branch of the SEIU? The CPUSA, of course, fully supports a federally mandated minimum wage. A news report from 2011 observed the connection between the SEIU and the Communist Party:
“Like two peas in a pod, unionists and Communists get along just find these days. Not just any union mind you, the union that President Obama so readily identifies with and was proud to have worked with. . . .
“Not only did the SEIU help to organize the [May Day] rally in conjunction with communists, they marched side-by-side with communists, while union members carried communist flags, communists carried union signs, and altogether there was no real way to tell the two apart.”
The connections between the SEIU, President Obama, and communist organizations of all types are well-established. It should raise major red flags when the communists support any proposal, policy, or organization. Those who back a mandatory minimum wage law and minimum wage hike might pause and reflect that they are in league with the communists, Barack Obama, and communist president FDR who ushered in the minimum wage.
Today, a host of Democratic Party presidential candidates advocate a federal minimum wage hike and greater government involvement in the economy. Bolshevik Bernie Sanders certainly endorses the idea. In his revolting book Our Revolution, Bernie spent several pages lying about the supposed benefits of a minimum wage. Here is a snippet:
“Millions of Americans work for totally inadequate wages. The current federal minimum wage of $7.25 an hour is a starvation wage. It must be raised. The minimum wage must become a living wage – which means raising it to $15 an hour by 2020 and indexing it into the future. . . .
“The truth is that states that raised the minimum wage in 2014 experienced faster job growth than those that did not. And a higher minimum wage boosts consumer spending” (Sanders, Our Revolution: A Future to Believe In, 218, 222).
Bernie Sanders, whose initials are appropriately BS, is a liar. As an old Soviet from long ago, Bernie knows that the minimum wage does not help businesses, does not promote economic growth, and absolutely hurts consumers. Yet, he and his allies in the Communist Party and Democratic Party want to jack the federal minimum wage up by nearly double to $15! This would destroy our national economy, putting thousands upon thousands of small businesses out of business.
Please keep in mind whenever you hear people advocate a minimum wage that the minimum wage scheme is part and parcel of the communist plan to take down the U.S. economy and has the hearty support of traitors like Bernie Sanders. As one article put it, the “leading Leftists seem to blindly follow the well-worn blueprints of internal destruction.” In pushing for a minimum wage – and an increased minimum wage at that – the “leftists” in our nation are taking us to the brink of economic catastrophe.
The above are only a few of thousands of real-life examples of businesses – even large business chains – which have gone out of business directly because of minimum wage laws. The website Facesof15 documents many more cases of businesses closing, moving, or downsizing because of the mandatory minimum wage drive – destroying the claims of the Bernie Sanderses among us. Yet despite the mass of evidence, the crowds continue their delirious chant for a mandatory minimum wage, apparently not thinking about or understanding the consequences. Their eyes see only dollar signs, yet they fail to realize that in the long run everyone will have less green in their wallets because of minimum wage laws.
When you see someone – a political candidate, a professor, a media personality, or whomever – advocate a mandatory minimum wage or a “living wage,” you know that that person either has zero economic sense or wishes harm to our Republic. Whether they promote a minimum wage hike because of ignorance of maliciousness makes no difference in the end – the consequences will be disastrously the same, especially for the poor. The U.S. economy literally cannot afford a federally mandated minimum wage hike.
As important as the fact that a mandatory minimum wage harms businesses and hurts the overall economy is, it is only is a secondary reason we should oppose the idea. Of far more importance are the moral and legal reasons why we cannot afford to institute a mandatory minimum wage.
Morally speaking, is it right to steal a person’s money? Is it just to steal a business’s wealth? It is correct to rob an employer of his profits and give them to his workers by the force of law? Is wealth redistribution an ethical or moral idea? The answer to each of these questions is the same: NO.
A mandatory minimum wage is nothing but theft. Perhaps indirect theft, like taxation, but theft nonetheless. This is so because the law forces one person to give his money to another or else suffer negative consequences. It is highway robbery to deprive a restaurant owner, for instance, of his livelihood by forcing him to give his money to his workers – workers, mind you, who willingly agreed to work for the wage they are currently receiving and who are not entitled to receive one cent more.
It is a dastardly thing to suggest we use the force of law to redistribute wealth from one segment of the population (employers) to another (employees). It is morally reprehensible to take from one person his property and give it to another without the consent of the person losing it. That is communism, folks. And just like communism, minimum wage laws should be abolished.
A minimum wage hike is also problematic in terms of legality. The U.S. Constitution is the supreme law of the land and all laws, federal, state, or local, must conform to it. Does the Constitution give authority to Congress – the body responsible for making laws – to take money from one segment of the population and give it to another? Is Congress empowered to fix the level of wages at a given point? Where, pray tell, does the Constitution say that the American People gave the government the right to take money from one person without his consent and give it to another? I fail to see where the Constitution authorizes our representatives to dictate how we run our businesses and how much we pay our employees.
I do not see it in the Constitution because it is not there! Such a provision does not exist. The right of private property was sacred to our Founding Fathers. They knew that there is no Liberty without the right to control private property (hence the reason the anti-Liberty communists seek to “abolish” private property). Property does not refer merely to land or structures. One’s assets, money, wealth, etc., are part of his “property.” Employers should be able to do with their property what they want, including pay their employees however much they choose. When we deprive businesses of their right to pay employees the wage they agree upon with the employee, we steal, in a measure, their Liberty, and infringe upon their property rights.
Isn’t it time we woke up to reality? Reality doesn’t care about your feelings – it hits you hard and fast whether you believe it in or not. And the reality is that mandating a minimum wage harms the economy (especially small businesses), violates the Constitution which defends our private property rights, and is inherently immoral.
Considering the economic infeasibility, unconstitutionality, and immorality of the mandatory minimum wage concept, isn’t it time we abandoned it? Will we abandon this failed idea or will we continue to play into the communists’ hands? They want nothing more than to wreck our economy and bring us to our knees. Will we allow them to do so simply because we see with our feelings and not with reason, logic, and evidence? While having a few extra bucks seems like a good thing, isn’t it a better thing to keep our economy afloat and let what’s left of our free enterprise system work?
As society has embraced socialist economics – a national bank, inflation, high taxes, high regulation, minimum wage laws, so-called anti-discrimination hiring laws, etc., – our economy has plummeted. By contrast, when we followed the Constitution, kept government out of our economic affairs, and possessed a truly free enterprise system, our economy boomed and helped produce the greatest, wealthiest, most powerful nation in the history of the world. So which future do we want – a Jacksonian era of prosperity and Liberty or a Stalinist nightmare of poverty and slavery? The choice is ours. And the mandatory minimum wage issue is a litmus test for where we stand on the broader question of individual Liberty.
August 2, 2019.
Please view the following PragerU videos for quick breakdowns on the minimum wage.