The Minimum Wage Destroys Jobs

Those points are fair enough. My beef with minimum wage increases is that they're not unilateral for all workers; only those whose wage would be lower than the minimum receive any sort of benefit, presuming they have a job at all.

To me, this devalues those workers who've invested time and dedication into a job. Consider two scenarios:

A: James has been working for "Big Burger" for a year. In that time, he's worked hard and has earned several raises. When he began at Big Burger, he earned the minimum wage of $5.50 per hour. Now, he earns $6.80 per hour. It's not fantastic but it's a job and James is glad to have one.

B: Doug has been working for Big Burger for one month. While he's not a horrible employee, he's sometimes unmotivated and cocky. Doug figures that if Big Burger wants him to work harder, they should pay him more for the trouble. As it stands, Doug is earning minimum wage, $5.50 per hour. He thinks he's worth far more.

Doug is loafing around one day, reading a newspaper. He learns that their state has approved a raise in the minimum wage. Effective in one month, the minimum wage will become $6.75 per hour, up $1.25 from its former rate.

Doug is thrilled, since this means that Big Burger will have to pay him more for the same amount of work. On top of that, since Big Burger didn't order the raises, Doug feels no increase in loyalty to the store.

James, however, is bummed. While Doug will be getting an automatic raise, he, James, will not. James's income is already above the standard for the new minimum wage, albeit only by $.05 per hour. James is the harder, more dependable worker but his pay scale will no longer reflect this. It is a tremendous blow to James's morale to know that even the most incompetent beginner will be be earning practically the same wage he had to work long and hard to acquire. While it's not Big Burger's fault, James's loyalty plummets. He can now work any low-end job in town and get pretty much the same sized paycheck.


In each case, the business suffers. They're made to pay more for unmotivated employees, and they lose the overhead profits needed to show appreciation to the dedicated ones.

Because these raises cut into profits, businesses are forced to compensate in several ways: raise prices, discontinue services, or eliminate employees. Each of these represents a potential reduction in the gross profit base, and ultimately serves to force the inflation rate higher as customers are made to pay extra so that the store can continue operations while adhering to the wage requirements.

The alternative to raising the minimum wage is lowering it and granting businesses the extra overhead to provide new services, keep more employees and hold better sales. But the downside to this is that few unemployed would be happy taking a job for considerably less than they would've been guaranteed only months before. Businesses would have the capacity to hire more, but there would be less willingness to work.

And without production, all business grinds to a halt. Yet when mandatory wage hikes cut into profits and employers can't afford to hire a full staff, productivity suffers equally and business, once again, grinds to a halt.

If there were a way to pay people what they're worth, I'd be all for it. But that's too subjective to be a reality.

Free labor is quite the Sword of Damocles.

Jam it back in, in the dark.