Perspectives: We all lose when minimum wage crusaders win

OPINION – My 15-year-old son has the right idea. He has carried a weekly paper route for the past four years. It has required him to hike the hills of our Cedar City neighborhood delivering to roughly 230 homes in all types of weather.

This past summer he started another job that had him pulling the endless tumbleweeds that grow all around the livestock auction yard. Every time he grabbed his gloves and a bottle of water and trudged out the door into the summer heat, my admiration for him grew. He wasn’t afraid to work.

When we crunched the numbers, it was clear that his hourly wages fell well short of the federal minimum wage of $7.25 an hour, but he’s never complained. While fast food workers in more than 60 cities across the country were striking for a $15 an hour wage, my son was busy gaining experience.

He understands that these are entry-level jobs in which his work ethic is being shaped. It’s never occurred to him to treat them as a permanent position or to lobby his employers for a living wage. What some would consider exploitation, he rightly recognizes as opportunity.

My son may be just 15, but he already understands that some jobs simply aren’t worth the current minimum wage.

It’s a distinction that escapes many adults who should know better. For instance, some California lawmakers are pushing hard to raise the minimum wage in that state to $10 an hour. They believe that they are doing workers a favor by mandating this wage. But as economist Frederic Bastiat noted more than 160 years ago, for each supposed benefit that is immediately seen, there are ensuing consequences that are unseen.

Every employment opportunity is the result of human choices. If your neighbor kid notices that your lawn needs mowing and offers to do it for $10, you may feel it worthwhile to hire him. Even if he charged you $20 to mow, you might still feel that it’s worth the price.

But if your neighbor kid wanted $50 or $100 to mow your yard, you’d likely choose not to hire him — even if your yard needs to be mowed. It’s not a matter of you being a greedy capitalist. It’s a matter of your placing higher value on that $50 or $100 than you do the service that would be provided.

These are the same kind of considerations that an employer must weigh in deciding whether or not to create a job.

If the value created by an employee is not higher than the cost of employing him, then it creates an unsustainable position for the employer. This is why minimum wage laws actually harm the very people that lawmakers claim they will help.

While some workers may celebrate that a higher wage has been mandated, the unseen effect that will follow is that business owners will reduce their employees’ hours, or simply eliminate certain jobs. The higher the minimum wage, the less employment opportunity will be available for lower-skilled and younger workers.

But higher unemployment among these workers is just one aspect of a double whammy that results from government-mandated wage hikes. Another inevitable consequence has potential to affect all of us.

When employment costs are raised, the higher costs of doing business will inevitably be passed on to the customer. Remember this when you’re paying $10 for a simple cheeseburger, fries and a drink.

In a free market, employers benefit when the value created by their employees is greater than their cost. The workers benefit not only from the wages they earn, but, as my son has learned, they also gain valuable experience and skills that provide increased opportunity.

Most importantly, society as a whole benefits when unemployment is low and productivity is high.

Conversely, when minimum wage crusaders prevail, everyone loses. The workers miss out on wages and work experience because of jobs that aren’t created. Employers lose out on the benefit they might have gained from the employee. And the rest of us lose out because those unemployed workers are unable to add their productivity to the economy.

Understanding the necessity of providing value versus demanding a state-mandated minimum wage from employers is the difference between how productive individuals and wage slaves think.

I’m grateful that my son is learning this essential lesson of basic economics early in his life.

 

Bryan Hyde is a news commentator and co-host of the Perspectives talk show on Fox News 1450 AM 93.1 FM. The opinions stated in this article are his and not representative of St. George News.

Email: bryanh@stgnews.com

Twitter: @youcancallmebry

Copyright St. George News, SaintGeorgeUtah.com LLC, 2013, all rights reserved.

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29 Comments

  • philiplo September 19, 2013 at 10:30 am

    Do you understand the unseen cost of NOT raising the minimum wage to something a little closer to poverty line income? Perhaps that $10 cheeseburger and fries you mention would be closer to the true cost when you add the additional societal cost of so many workers in poverty. These are not slackers. They are people working just as hard as your son (albeit not getting quite as sweaty), for wages that end up being supplemented by assistance programs (various forms of welfare).
    .
    Yes, every time to pay just $6 for your cheeseburger and fries, you are also paying for SNAP, public housing, and whatever other support is provided those employees because of their inadequate wage.
    .
    In 2012, McDonalds Corp. spent over SIX BILLION dollars paying dividends to shareholders and buying back company stock. According to Bloomberg.com, that comes to $14,826 per employee! Meanwhile, the worker earns a minimum wage with a purchasing power 20% less than the minimum of 40 years ago.
    .
    Also in 2012, McDonalds Corp. paid their CEO $8.75 MILLION!! That means that the average McDonald’s employee would have to work nearly 600 YEARS to earn what the CEO got for a single year of service.
    .
    Power (the power of the dollar) has shifted WAAAY too far in favor of management and shareholders. Workers unite? You bet your a$$!

    • Mike September 19, 2013 at 12:25 pm

      You obviously missed the ENTIRE point of what this man has said.

      Raising the minimum wage loses jobs. Period. The CEO of McDonald’s is the CEO. It’s his company. The daily workers are being paid fair market value for their services. If they don’t like it, there are a thousand people who won’t complain about the wages willing to take their place.

      What you obviously are incapable of understanding is how minimum wage affects inflation. If you raise minimum wage by 100%, you’re guaranteeing that inflation is going to explode, and that $15 an hour is still going to be the same value it is now.

      Learn anything at all about economics before you start criticizing a well written post, please.

      • philiplo September 19, 2013 at 7:16 pm

        “Raising the minimum wage loses jobs. Period.”
        .
        Please offer proof of this.
        .
        .
        ” If they don’t like it, there are a thousand people who won’t complain about the wages willing to take their place.”
        .
        Yes, which is exactly why a preponderance of our manufacturing jobs have moved overseas, and many support jobs followed. You’re saying we should join the “race to the bottom?” We will lose.
        .
        .
        ” If you raise minimum wage by 100%, you’re guaranteeing that inflation is going to explode, and that $15 an hour is still going to be the same value it is now.”
        .
        And I’m sure you have studies that prove this? Historical evidence? Anything?

        • Bryan Hyde Bryan Hyde September 19, 2013 at 8:33 pm

          Arguing is fun, isn’t it? But there comes a point where if you aren’t conversant in simple economics that you’re just wasting other people’s time.
          .
          Henry Hazlitt’s “Economics In One Lesson” is the best primer you’ll find on free market economic principles. Chapter 18 is the one you’ll find most informative.
          .
          You’ll have much more to contribute by getting some foundational knowledge on this subject before throwing down the gauntlet.
          .
          http://mises.org/books/economics_in_one_lesson_hazlitt.pdf

          • philiplo September 19, 2013 at 9:57 pm

            Hang on, Mr. Opinion Writer man. Mike is the one making claims about economics, and when I ask him to support those claims you call me ignorant?
            .
            So which part of what I wrote is so ignorant as to be laughable? If you point it out, I’ll be happy to offer supporting evidence. Otherwise, keep your juvenile insults to yourself and lets all just go about our business.

          • Bryan Hyde Bryan Hyde September 20, 2013 at 7:17 am

            Hit a nerve, didn’t I? Look, I’m not saying that you’re wrong, but I will freely admit that Hazlitt offers real substance on the issue of minimum wage. He’s not the one playing the “Sez you,” game. There are no known exceptions to the fundamental law of demand. The higher the price of something the less people will take of it. This applies to the costs of doing business too.

          • philiplo September 20, 2013 at 7:55 am

            Hit a nerve? No, since your criticism was completely off-base.
            .
            But you did find a way to respond immaturely with the “hit a nerve” comment. Kudos for that, I suppose. Oh, look. Now I’ve responded in kind. Crud.

  • Giuseppe September 19, 2013 at 10:39 am

    You are comparing apples to oranges when you compare your son pulling weeds or a neighbor child mowing your lawn to that of other minimum wage jobs such as those in the service industry. The weed pulling and lawn mowing are labor jobs that do not generate revenue for the weed or lawn owner. Where as a service job at McDonalds generates revenue for the McDonalds owner. In 2012 McDonalds reported 5 Billion in profits and Walmart reported 15.7 Billion. It is nothing but greed to suggest McDonalds or walmart could not afford the pay the employees a little more for the work they do. It is only a minimum wage job because the industry has CHOOSEN to make it so. Look at it in another perspective. As an employer I look for employees that go above and beyond what is required of them. It sure would be nice if the employer would go above and beyond the minimum required by law. With 15 Billion in profits it is shameful to pay only what the law requires. Greed greed greed, how much is enough?

  • Stephen Palmer September 19, 2013 at 11:42 am

    Bryan, I agree with the argument. I also think it would benefit from taking it even further and looking at this holistically.

    The crusaders do have a valid and vital point: It is incredibly difficult, if not impossible, for any adult, particularly parents, to live on the current minimum wage.

    I think it actually bolsters your argument to acknowledge that.

    The easy answer, however, is more government intervention. But dig deeper and in most cases you’ll find that government intervention is largely responsible for the loss of the value of our currency and decreasing social mobility.

    But I must say that if we’re looking solely at the minimum wage issue, I tend to agree with those wanting to raise it.

    That’s why I think it’s problematic to attack this particular issue head-one.

    We need a broader discussion of the forces that cause poverty. With that deeper understanding, the minimum wage issue takes care of itself.

  • Bryan Hyde Bryan Hyde September 19, 2013 at 11:45 am

    A lot of folks sure tend to jump right to classic Marxism out of a misguided sense of “to each according to his need, from each according to his means.”
    .
    The real answer is found in our dwindling sense of becoming the kind of person who is creating value.
    .
    Learning marketable skills, becoming better educated, and being entrepreneurial are personal qualities that have taken a backseat to idea of simply being an employee. It’s not the employer’s fault if we fail to provide sufficient value. That’s our responsibility.

    • Andrew September 20, 2013 at 6:07 am

      Perhaps you don’t understand the demographics at work here. Learning marketable skills and becoming better educated is surely a noble pursuit, but what sort of marketable skills do you suggest? If you haven’t noticed, there’s quite a large market for retail persons and fast-food workers.

      There seems to have been for some time a misconception that minimum wage jobs are something that only high school students work. While it’s great to hear that your son gets by fine (and is willing to work hard) for less than the minimum wage, the reality is that over 90% of minimum wage employees are over the age of 20. I know many people who have to support a family on these dismal wages, and as a result some of them work 70-80 hours per week.

      You say that it’s not an employer’s fault if we fail to provide sufficient value, but the fact of the matter is employees DO provide sufficient value, thus they are employed. Your claim is akin to suggesting that the average company is going to voluntarily and altruistically pay people more than they must. As we all know, this is not a typical business practice. With so many people in our country making near unlivable wages, I don’t know how you can offer a suggestion as simple as “be entrepreneurial.” People are being taken advantage of for the sake of profit, and it’s about time the government does a little more for the problem.

      • Bryan Hyde Bryan Hyde September 20, 2013 at 1:03 pm

        Ask an entrepreneur how many hours a week they’re willing to work to get their business off the ground and the successful ones will answer, “As many as it takes.”
        .
        That’s a whole different mindset from the wage slave who thinks he or she is entitled to a “living wage” that can be earned in a maximum of 40 hour per week.
        .
        It’s a painful truth, but our choices are what determine whether we remain qualified only for entry-level jobs or we acquire skill-sets and knowledge that enable us to move upward.
        .
        I hate crony capitalism as much as anyone, but let’s stop complaining about the people who have been willing to pay the price for personal excellence and start working on our own.

        • philiplo September 20, 2013 at 5:58 pm

          What “price for personal excellence” did the WalMart heirs pay? Does being born into the right (read: wealthy) family count as paying your dues?

  • Anna September 19, 2013 at 11:48 am

    I 100% agree with this article. Most jobs that pay minimum wage do so because it is all that company can afford to pay each worker. I own 2 businesses and while I chose to pay slightly higher than minimum wage I couldn’t possibly pay higher than that without raising the cost of my product which then would no longer sell and I would lose my business. Also remember the employer has to match that employees taxes which is why I can not afford to pay more. If I took $300 in taxes out of your paycheck then guess what? I have to give $300 also! I started out working minimum wage jobs in high school and college and because I was paid so low, I chose to go to college and obtain a better income. If my minimum wage was high enough maybe I would have never pushed my self to earn more. We all have to earn our way up the corporate latter and believe me most people who flip burgers don’t do enough work to deserve more than the minimum wage.

    • philiplo September 19, 2013 at 10:05 pm

      “Most jobs that pay minimum wage do so because it is all that company can afford to pay each worker.”
      .
      Define “most.” As several people have already pointed out, McDonalds, representative of many fast-food chains employing minimum wage workers, could EASILY afford much more in salaries and benefits. However, they CHOOSE to keep the wages artificially low, because they can. More profit for shareholders and bigger salaries for upper management. Does the CEO of such a company truly offer 600 times the value of the average worker?
      .
      Collectively those employees have much more power to negotiate than they do singly, which is exactly why every one of these corporations is against unionization. Bring the workers to the table as a collective entity and the playing field tends to level a bit. I applaud the efforts of those employees currently attempting to organize, and I hope they are successful.
      .
      .
      “…most people who flip burgers don’t do enough work to deserve more than the minimum wage.”
      .
      You mean the current minimum, right? So what evidence do you have to support this claim?

      • Josh September 20, 2013 at 9:45 am

        Mr. Philiplo,

        According to the 2008 census data, there were seperate 27.7 Million businesses in the US. Of these, only 18,469 of these businesses employ over 500 people and only 1,956 of these businesses employ more than 5,000 people. When you talk about the businesses like McD’s that have those huge profit margins, you are talking about only a few businesses compared to the grand scheme of things.

        • philiplo September 20, 2013 at 10:17 am

          Hi Josh,
          .
          Your quoted numbers are correct, but disingenuous. Yes, there are over 27 million businesses registered in the U.S.. However, a huge majority of those (up to 2/3) are non-employee businesses, meaning they are run without a payroll. It would seem obvious then, with no employees and no payroll, these businesses should not be included in a discussion of minimum wage.
          .
          http://www.census.gov/econ/smallbus.html
          .
          So we are now looking at a total of slightly less than 6 million US firms in existence. These companies employ approximately 121 million people. Narrowing the numbers to just the mega-corps (more than 500 employees), we see that these corps are, in truth, employing MORE THAN HALF of the total workforce (or at least of those not self-employed). So when you say I’m “talking about only a few businesses,” you neglect the fact that I’m talking about a MAJORITY of employed persons.

  • Josh Dalton September 19, 2013 at 12:28 pm

    I sold Verizon products and service at $7.36hr. It was the lowest wage I have ever accepted from an employer. I have a college education! It was rough getting by. Not only that the commision scale was bogus! I decided I was worth more. Those of you who were my customers know that the level of service and the knowledge I have in technology was worth way more than $7.36hr. Now I make about 200% in wages and I don’t even carry a cell phone anymore. If working for minimum wage does anything, its builds character and challenge me to strive for better. I decided that settling for a mediocer company was settling for mediocrity in my entire life. So with that being said….DON’T GET A JOB A mybullfrog.com Premium Verizon Wireless Retailer. GO FALCONS!!

  • Tim September 19, 2013 at 12:39 pm

    When your son has to support a family, or even himself, on his newspaper route and weed-pulling jobs, let me know. I have no sympathy for corporations and their shareholders who continue to make record profits and millions in dividends while enjoying massive tax breaks and continuing to send living-wage jobs overseas. As a previous poster wrote, that’s just greed. Only when our lawmakers have the backbone to do away with the corporate welfare that has been going on in this nation for two decades will you see these companies sit up and pay attention. We are a market economy. Market economies are consumer driven, meaning they flourish when there is a thriving middle-class with money to spend. With a broke middle class, what’s left of it, how do you propose that our economy show any growth? You probably also believe that the rich create jobs.

    Perhaps you’ll feel differently in ten years when your son and his family has to move in with you because he can’t make enough to support them, even with a college degree, because that’s where we’re headed in your right-wing economic dystopia.

  • momof2 September 19, 2013 at 12:54 pm

    I’m sure you’re the same person that complains about your paycheck contributing to welfare/other government aid programs. I know several people with college degrees that are forced to work minimum wage jobs bcuz they can’t find work in their studied field. Look at the comparison between inflation and minimum wage. Ridiculous. You can’t raise a family in our economy with a full-time minimum wage job. You just can’t If corporations would put their money into their hard working employees and take money away from the douchebag ceos, there would be no rise in prices. In short, without a rise in minimum wage, the disgusting “rich get richer, poor get poorer” trend will continue.

  • anonymous September 19, 2013 at 1:50 pm

    Every time minimum wage has been raised the dollar has either devalued to the point the wage shows no net change and usually an overall loss or inflated horribly. Example, when I started working the minimum wage was 4.15 an hour. Gas was under $1 per gallon, McDonalds burgers were 39 cents. A movie ticket was 1.25. I could earn $10 and take myself and a date out. I could earn that $10 in 4 hours of work, after taxes.
    Now gas is around $4.00 a gallon, a McDonald’s burger is 99 cents, A movie ticket is $8.00. $10 gets me 1 burger, no gas, and a movie ticket. Say I work the 4 hours previously stated. I bring in $22 dollars after taxes. I can take myself and a date to the movies, but dinner is not going to happen if I want some gas for my car.
    My point is the dollar amount may have raised but the actual value of the dollar has devalued and the added minimum wage actually left workers far worse than if it had never been raised at all. Never raised and we would never have the corresponding inflation in the market and devaluation of the dollar.
    I suggest a removal of the minimum wage. If you don’t pay enough, nobody works for you and your business suffers. If you do pay enough, people stay with you and your business prospers.
    I did multiple minimum wage jobs, well past college as a way to supplement my income, including GASP! McDonalds. I have run my own business and have dealt with all the headaches and stresses of paying my employees, yet not making minimum wage myself for all the long hours required, then having to work even more hours while cutting my labor force to make my own ends meet. I had employees who requested I pay them less because they understood what we both were working towards. Eventually the business made us all a living wage, but it took time and personal sacrifices of myself and my employees.

    • philiplo September 19, 2013 at 7:13 pm

      “Never raised and we would never have the corresponding inflation in the market and devaluation of the dollar.”
      .
      .
      Please show evidence to support that conclusion. It is ridiculous to say that an increase in the minimum wage caused the higher prices you wrote about, especially since inflation has FAR outpaced minimum wage increases over the last 40 years.

  • Bretticus September 19, 2013 at 4:55 pm

    Not that I don’t feel a little disgusted when Walmart has obscene profits realizing that most of their workforce doesn’t make a livable wage, I see both sides here. It’s not fair that small business that can barely keep their doors open have to pay a higher wage for a possibly menial job.

    Perhaps a compromise is to require a sliding wage scale based on the company’s profits / employee. Never gonna happen…just a thought.

  • Mark Stewart September 19, 2013 at 5:05 pm

    I love listening to Christians talking people into being poor. It’s as if people are unable to see the consequences. Maybe a prayer will pray it all away.

    Besides, Christians need more money dedicated to WARS.

  • Eric September 19, 2013 at 10:53 pm

    As a Husband and a father of three kids I stopped reading after being expected to relate to a 15 year old being happy to make just under $7.25. Trust me, if I were 15 I’d be happy to be making almost minimum wage as well, but something tells me that 15 year olds aren’t a large concern when considering minimum wage.

  • Carol DeMille September 19, 2013 at 11:20 pm

    We say we want people on welfare or assistance to do something for this money. My thought is why can’t we take some money from welfare and let it be the funding for increasing the minimum wage for those that are in the type of jobs that don’t make enough to support themselves or bring them out of poverty. Maybe if we did this, people could take these jobs paying minimum or below and actually be working for the help that they still may need from the government. You will always have the person taking advantage of programs but there are a lot of good people that want to work but can’t afford to work. Working costs money….gas, car, car ins., clothes, shoes, phone, childcare, etc….and from past experience I KNOW that there is more help for those no working at all than those WORKING but because of the cost of working are put below the poverty level. A thought that I think is worth looking into….

  • elliemae100 September 19, 2013 at 11:52 pm

    Paying minimum wage leads to employees working more than one job – and often being exhausted due to working so much. These workers weren’t privileged enough to attend college and don’t have many work options, whether due to the economy or other socioeconomic factors.
    *We aren’t talking about highly skilled workers when we refer to fast food restaurant workers, but the companies can more than afford to pay living wages to their workers. They choose not to do so because they don’t value their employees, and don’t appear to be concerned about the appearance as the upper echelon reaps huge salaries while their workers subsist on food stamps. The proposed cuts to the food stamp program, if pushed through, will mean that fast food workers will be serving food they can’t afford, then going home to empty cupboards while their owners have private golf courses and pretend they’re real people in their commercials.
    *Huge corporations hate the little guys. Why pay workers a living wage when they can put out laughable budgets (http://www.practicalmoneyskills.com/mcdonalds/documents/McD_Journal2.pdf) and continue to hold their workers hostage? The writer of the article is grateful that his son is learning about basic economics early in his life – but if he were forced to live and raise his family on minimum wage with no end in sight, he might change his mind. The writer comments to one letter that one must become a person who is creating value. Does this mean that these people have no value? Sure sounds like it.
    *Speaking of workers with little value, restaurant workers who receive more than $30/month in tips earn $2.13 per hour. For many employees of restaurants such as Denny’s, this means their entire check is dedicated to paying for healthcare and they must subsist on their tips. We need real solutions to the amounts many workers – not just fast food workers – are earning. With corporate profits at an all-time high, we need to learn how to value our employees rather than find ways to penalize them for having limited life choices.

  • sam September 20, 2013 at 6:38 am

    This article and half the people commenting seem to be spouting the same Rush/Glenn Beck garbage, you have nothing to back what you are saying. In’n’out starts employees out at 10.50 and still remains profitable, Costco starts many employees at 13.00 and still remains profitable. Many people born with silver spoons want to keep wages low and home prices high to keep the so called undesirables in their place, then they b@tch and moan about so called entitlements and handouts saying my taxes are paying for your food when in reality they helped place many into these positions, now the brainwashed and indoctrinated want to abolish these programs not realizing the hell that would come from this, go ahead and take these peoples food away and see what happens when the masses have empty stomachs, lets just say the Egyptian riots would look like Disney land compared to what would happen here!

    • philiplo September 20, 2013 at 1:13 pm

      “Many people born with silver spoons want to keep wages low and home prices high to keep the so called undesirables in their place, then they b@tch and moan about so called entitlements and handouts saying my taxes are paying for your food when in reality they helped place many into these positions,”
      .
      (cough, cough) WalMart! (cough, cough)

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