Monday, July 31, 2006

Republicans and the Minimum Wage

It seems that the Republican-controlled House has passed legislation including - right towards the end - a provision to increase the national minimum wage to $7.25 an hour by 2009.

A number of liberal sources have claimed that Republicans allowed this provision to go through because they are trying to pander to working Americans in an election year.

It is possible that I don't understand all aspects of the minimum wage, but from what I understand raising it is a very poor idea. While it is believed by some that people earning more money is good for everyone, I think it's quite obviously a short-term disastrous "solution." Further, raising the minimum wage engenders a dangerous socialist element into our already heavily regulated economy. Who are politicians to decide proper compensation for a particular job? Proponents of raising the minimum wage argue that no one should do jobs for $5.15 an hour. This of course leads to a very slippery slope - should we then make sure no one earns below a certain amount per year? How much is enough - $7.00 an hour? $8.00? Maybe a yearly minimum of $50,000 a year? In that case, what's my motivation for attending college if I can be a receptionist and make more money than my parents?

All of these artificial wage controls ultimately lead toward socialism ending in a utopian world of equal wages for all (otherwise known as communism). Indeed, some students at my university are arguing for a "living wage" for university employees. However, university employees are often unusually compensated - as they are here - including a free college education for spouses and children. This is not included in an analysis of their hourly wages.

However, further included in the danger of raising the minimum wage is the limit in resources of a company. If I employ a couple of workers on my small farm for the minimum wage, and it jumps two dollars in three years - which I can't afford - I simply fire one of my workers. Raising the minimum wage equals fewer employees that are better compensated. A number of small businesses will be in this same predicament. Also, proponents of raising the minimum wage argue that this should help employees of large ("evil") companies like Wal-Mart. Ironically, most of these large corporations already pay their workers more than the minimum wage. IN the end this kind of wage control helps large businesses by driving small ones out of business. Ultimately raising the minimum wage raises unemployment for just these reasons, and also makes it more difficult and expensive - especially for small employers - to hire more workers.

In the end raising the minimum wage is a unproductive move towards a more controlled and socialist economy, hurts small businesses, and raises unemployment. In this case, I hope at least one part of this bill doesn't make it past the Senate.

Oh, and Republicans shouldn't let it.

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