In the past couple of years, a number of politicians have pushed hard for a minimum wage increase. Notable supporters include Elizabeth Warren and Bernie Sanders. Just this week, Connecticut agreed to incrementally up its minimum to $15 an hour in the next four years. Advocates of the idea claim that it will improve the quality of life for many, especially the working poor. However, they miss the fact (or don’t care) that their plan would functionally cut wages for millions of working-class Americans.
Nate Galt | United States
The federal minimum wage has been a controversial issue ever since it was introduced by President Roosevelt in 1938. Proponents of raising it say that it will help job growth and reduce poverty. However, opponents believe that raising the federal minimum wage will lead to layoffs and closures of small businesses. In all, the current federal minimum wage of seven dollars and twenty-five cents per hour is not a wage that someone can afford basic necessities with. People who are paid the federal minimum wage should be able to afford things such as clothes, food, and a roof over their head. Raising the minimum wage has been an issue adopted by “progressive” Democrats and the Green Party.
Taxpayers are paying for the minimum wage, just indirectly. They subsidize programs such as Food Stamps while large corporations save money by not paying their workers a living wage. This is extreme inequality because that money should go to workers employed by these corporations, not into the pockets of billionaires who try to cut corners by paying their workers very low wages.
Raising the minimum wage would help the economy. According to the Economic Policy Institute, a minimum wage increase to $10.10 an hour would make $22.1 billion flow into the economy and would create about 85,000 new jobs in three years. Further, economists from the Federal Reserve Bank of Chicago made a prediction that if the minimum wage were to rise by $1.75, household spending would increase by $48 billion in the next year. While these are merely predictions and are imperfect, they show that household spending increases as the minimum wage is raised. This boosts the gross domestic product and spurs job growth. For example, in Snohomish County in Washington State, there were no local minimum wages higher than the state minimum of $9.47. The state then raised the minimum wage to eleven dollars per hour. The full weight of the $1.53 increase, or over 16%, was assumed by employers. Subsequently, sixteen thousand jobs were created in Snohomish County.
Some people say that raising the minimum wage hurts small businesses. According to Think Progress, two-thirds of “low‐wage workers are not employed by small businesses, but rather by large corporations…” Also, the three largest employers of minimum wage workers are Walmart, Yum! Brands (Pizza Hut, Taco Bell, and KFC), and McDonald’s. A hike in the minimum wage will not make large corporations like Walmart shut their doors, and its workers will benefit from it.
Another reason the minimum wage should be raised is that it is impossible to afford rent in every state if one is paid $7.25. The state with the lowest “living wage” is South Dakota at just over 14 dollars, which is nearly double the current federal minimum wage. The definition of “living wage” is the bare minimum salary one needs to be able to afford rent, basic clothing, and groceries without skipping meals or receiving aid from the federal government. People who work full-time and are paid the minimum wage cannot provide basic necessities for themselves and their family, let alone afford to pay rent. Right now, this is the case, and millions of Americans are in a dire financial situation because they live on around only fifteen thousand dollars per year if they work full time. These people receive benefits which are subsidized by taxpayers because their employers do not pay them an adequate wage. As a result, businesses are saving money while taxpayers have to pick up the burden. If people get a living wage, they do not need to rely on taxpayer-funded public assistance. Better pay would let the government cut a lot of taxpayers’ funding of the money that it currently spends on programs to help counter poverty.
Others say that if the current minimum wage were increased, the price of items would increase. However, researchers at Purdue University found that increasing the wages of fast food workers to $15 an hour would only result in a price increase of around 4 percent. 4 percent of the cost of a Big Mac is around 23 cents, which is not a significant amount of money. The workers will have their wages doubled and will be able to make ends meet. Despite the negligible increase in prices, workers would end up with more money in their pockets and would be affected positively by this positively.
Increasing the minimum wage to 15 dollars would benefit the economy. It helps boost the GDP and job growth, and it alleviates taxpayers’ burden of paying for welfare. $15 per hour will allow minimum wage workers to make ends meet and to afford housing, clothing, and food without having to rely on government programs such as food stamps. It would reduce the number of Americans living in poverty as well. All of the above benefits have no significant drawbacks, so the only logical thing to do is to support raising the minimum wage to $15 per hour to help workers, the economy, and your tax rate. Should businesses get so-called “corporate welfare” while taxpayers have to foot the bill? Even though raising the minimum wage seems like a leftist, Bernie Sanders-type policy, all libertarians should support it. Taxes, welfare, and other benefits would be cut, leaving more money in Americans’ pockets.
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In a society abundant with lies, War is Peace, Freedom is Slavery, Ignorance is Strength, what makes us ‘free’ is what keeps us in chains. This goes for many facets of society; we believe we are strengthened by numbers, and as such, we collectivize each other. We are placed in a group from birth, depending on class, among others. Society fails to realize that the smallest minority in the world is in fact the individual. We orient ourselves to think in a way as to how legislation will affect a group based upon the supposed traits that may or may not be true.
This disposition is also found in labor unions that follow a range of circumstances where workers are put into a collectivist pool that does not care of the troubles of each and every individual. There is a financial struggle placed on the common worker and the inability to escape it that leads to their demise in the work field. In current iterations of labor unions, the laborer will, more times than not, find greater destruction of his or her economic freedom than benefits.
Labor Unions and the Free Market
Some creations from years and years ago may now be obsolete; 8 track tapes, payphones, and Congress are all cases of this. Labor unions are another such example. A free market, with only voluntary unions (not involved in government), in the current economy with superb job mobility may provide what labor unions had originally promised. The labor movement of many years ago, as put by History.com, “…grew out of the need to protect the common interest of workers. For those in the industrial sector, organized labor unions fought for better wages, reasonable hours and safer working conditions.”
Coercion and Freedom
The vision in this is a concept of individual worker rights through voluntary bargaining. Simply put, these goals of worker freedom are not present today, as were before. The key contrast from then and now is worker choice. Randall G. Holcombe illustrated the difference between coercive association and voluntarism in labor unions. He emphasized that the hand of “labor law has given unions the power to dictate to employees collective bargaining conditions, and has deprived employees of the right to bargain for themselves regarding their conditions of employment.”
The lack of voluntarism in unions clearly should be counter-intuitive, but this has been the reality for a very long time. Sanctions are given for failure to comply with obligatory rules of labor laws regarding unions. In current, modern forms of unions, the worker simply is not satisfied and is disregarded in his or her rights of freedom of association in their compulsory activities with such unions.
The financial goals of early unions dealt with the idea of “livable wages,” a phrase often heard even to this day. The workers of the Industrial Revolution faced the hardships of more than humble pay, which was not enough to support a family. This time period, in the absence of unions, is often used to counter the argument against such unions, due to the severity of the time of industrialization. The push to fix this turned into a monster after economists realized the detrimental effects to the economy by way of minimum wage increases.
A Forced Living Wage Hurts Consumers
James Sherk of the Heritage Foundation recognized that if employers must raise wages for the sake of the law, they compensate for a profit loss when they “…pass on those higher wages to consumers through higher prices, and often they also earn lower profits. Economic research finds that unions… hurt consumers generally, and especially workers who are denied job opportunities.” The blow an economy of a certain market takes in this does not come unnoticed.
Consumers (which include the common worker as well) pay more for their goods. This is only a part of the equation; once employers are involuntarily forced to pay their employees more, they are left to fire workers, thus increasing unemployment. Increased wages will undoubtedly seem like a positive to all, but, throughout the last few decades, as Mises explained, “wherever and whenever the unions succeeded in raising wage rates above the potential market rate, i.e., above the amount the workers would have earned without union interference, ‘institutional’ unemployment developed as a lasting phenomenon.”
Many Left in the Dark
Sure, unions have raised wages, but these institutions are giving a smaller percentage of workers these wages, leaving plenty of unemployed union workers to starve. Evidently, labor unions fail their members financially, leaving the average laborer in a worse position financially with higher market prices and reduced employment rates.
Many wonderful concepts from brilliant minds may be useless in practice, where its flaws become ever so clear. Labor unions, institutions promising to help the worker, disappoint rather than support. In fact, unions have hit the polar opposite of the mark. Research findings regarding union worker satisfaction show “…when it comes to job satisfaction, the economic advantages of union jobs are not sufficient to compensate for job content and work environment factors.
It comes as no surprise to the job satisfaction researcher that job content — the nature of the tasks people are given to do — weighs heavily in overall job satisfaction scores.” Union workers find themselves trapped in a coercive group that causes unemployment and increased prices of goods, all due to the push for increased wages. Serious reform to the current system must occur before labor unions are considered to be a viable benefit to the worker.
A Never-Ending Game of Failure
The workers of America go to work everyday, in constant hopes of success. They wonder if it may be a never-ending game they are forced to play, with no real end, only a struggle. Workers may look for the escape from their troubles they cannot fight, though they try. It is sometimes a saddening spectacle to observe.
Even the strongest of us humans may fall victim to those in power. A god among men, Sisyphus, of Greek mythology was forced to push a boulder up a mountain perpetually, but “at the very end of his long effort measured by skyless space and time without depth, the purpose is achieved. Then Sisyphus watches the stone rush down in a few moments toward that lower world whence he will have to push it up again toward the summit.” The common man and women face this same dilemma. He or she may look, as any would, to escape what enslaves them. The labor force, unionized, is what will leave them in chains. And they may never know it.
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By Francis Folz | United States
Last week, I examined how libertarians and neo-progressives share common roots that run as deep as the anti-war movement in the 1960’s. Considering how libertarians and progressives have found common ground in the past, is it any wonder that libertarians and progressives find themselves together on so many present issues? After all, former Libertarian Party presidential nominee Gary Johnson once stated he found common ground with unabashed social democrat Bernie Sanders close to 70% of the time.
I believe one reason why it is quite prevalent to find common ground between libertarians and “democratic socialists” is because both sides share similar sentiments. At their cores, there is a sincere passion to uplift as many fellow citizens as possible and to achieve peace. It is often the means by which both sides believe it is best to achieve their underlying, intended goals that diverges the ideologies.
Although progressives advocate for a single-payer, authoritarian health care system, libertarians and progressives tend to agree that health care is too expensive and there are some common sense, capitalist ways to make health care more affordable. Both sides tend to agree on removing some of our costly, crony regulations, like the prohibition on purchasing drugs from other countries or the inability to buy insurance plans across state lines.
Progressives and libertarians also find themselves sharing opposition to America’s neocon foreign policy. Both sides acknowledge America’s foreign policy is often made up of expensive mistakes that only benefit the military industrial complex. Although progressives favor participation in multi-national organizations like NATO and the U.N. to achieve peace, both groups prefer a more humble approach to American interventions.
Both groups also champion civil liberties and civil rights, although how they are addressed sometimes differs. In regards to civil rights, neo-progressives tend to have collectivist mindsets and indulge in identity politics. This contrasts tremendously with libertarians who believe in liberalism and in empowering everyone via individualism. Bernie’s supporters, however, join forces with libertarians in defense of civil liberties. This includes our universal right to privacy and the defense of human rights activists like Edward Snowden and Julian Assange.
The size and scope of government is often where libertarians and Sanders-democrats digress from each other the most. Although both groups promote personal freedom and responsibility, especially in regards to reproductive care and drug usage, neo-progressives contradict those sentiments by bolstering gun control. In some cases, they even limit free speech. Whereas libertarians view government as a necessary evil that must be limited and restrained, neo-progressives believe the government’s role must be very robust in order to accomplish all desired outcomes.
I genuinely believe the hearts of today’s “democratic socialists” are in the right place. However, the majority of their “solutions” require a large, controlling state which makes countless decisions for the citizenry via regulations. I don’t question the intentions of those who fight for $15 an hour. After all, with the high costs of living, in part the fault of poor monetary policy, who can live off of $7.25 (less after taxes) an hour? However, neo-progressives fail to see how large corporations laud the prospects of running locally owned companies out of business through the consequential high prices and labor costs.
Socialism means well. After all, the intended goal of democratic socialists is to elevate the poor and the middle class. However, in practice, socialism never succeeds because humans are inherently greedy, especially when entrusted with resources, influence, and power. Our founding fathers recognized that corrupt attribute of humanity. Therefore, they constituted a liberal government, limited by the citizenry, the states, and the judicial system. It is time we find common ground with one another and work together towards restoring liberty and prosperity.
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By Indri Schaelicke | United States
When it comes to the minimum wage, few people truly understand the complexity of the mechanism. Many believe that raising it is a quick fix to poverty. However, minimum wage hikes only increase the cost of living, hurting the economy for both the rich and the poor.
In 2014, Seattle signed a law that would increase the minimum wage there each year. By 2021, the wage will reach $15 per hour. While many support this law, libertarians are scratching their heads. Wages are an input of production, meaning that when a business produces a good or provides a service, part of its success is due to the employees and their necessary wages. When the cost of an input of production increases, the final price of the good or service must also increase. If all wages in a city increase, then all prices of goods and services will increase. Things will be no more affordable than they were before the minimum wage hike.
Minimum wage increases also lead to significant job losses. As mentioned before, when wages increase, the final price of a good or service must also. In order to combat having to charge high prices for their products, businesses can fire employees and move to automated systems that make use of the latest technology and do not require much human input. McDonald’s Restaurants recently started using automated kiosks in some stores to cut down on the amount of staff. This investment insulates McDonald’s from the fluctuations of the labor market and from the effects of minimum wage increases.
Kiosks like these have appeared in McDonald’s across the US as the fast food chain seeks to insulate itself from labor market fluctuations and increases in the minimum wage. Image Source
The minimum wage hurts those whose skills are worth less than a mandated minimum. As they are not worth, say, $15 per hour, employers cannot hire them at all. Someone whose typing skills only earn them $5 per hour is unable to find work at all. But, if the minimum wage ends, he or she will be able to find an employer willing to hire them. While $5 per hour is nowhere near the wage required to live a comfortable life, it is a stepping stone to higher paying jobs in the future. The person given in the previous example can work at improving their typing skills until they find employers willing to pay incrementally more. In this way, people are able to climb the socio-economic hierarchy.
Beyond just the minimum wage’s harm to the economy, it is also immoral, because it limits what terms two consenting adults can voluntarily negotiate a contract for. The state should not have any say in how a person values their labor. These terms are between employer and employee.
Abolishing the minimum wage will open up job possibilities for those that need them most. It is one step closer to a world where the state does not control every aspect of life. Individual sovereignty begins with being able to decide one’s worth.
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