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It was a sunny, chilly day on 20 January 1981, when President Reagan stood outside the Capitol for
his inaugural address and declared that “government is not the solution to our problem, government is the
problem.” (Ref. 1)
How right he was! Once again, we find the Marxist element of the Democratic Party and their current
Party leader, President Joseph Biden, pushing for a federal minimum wage of $15 per hour. Prodded by that Socialist
and Communist sympathizer, Senator Bernie Sanders of Vermont, America is being told that government central planners can do
better than the free-market business people who have historically made these United States the economic powerhouse of the
world for the past three centuries, while, at the same time, every economy that was run by central planners has failed
miserably!
“President Joe Biden, looking around at how to deal with COVID-19’s assault on the economy, is
pushing a program that would abet the assault.
“It would likely eliminate 1.3 million jobs over time, turn some full-time jobs into
part-time jobs, raise prices for consumers, put some businesses out of business and depress entrepreneurial initiative in
starting new businesses. [Emphasis mine]
“The issue is Biden’s proposed $15 minimum wage that would offer benefits to millions at a
significant cost to others, mainly the young and the poor. People cheer and politicians benefit while populist-style
progressives pat themselves on the back for supposed compassion that gives the word a bad name. They are afflicted by the
Robin Hood mentality — steal from the rich and give to the poor — although they are actually persecuting free markets and
taking from the poor.
“They sadly have an accompanying conviction, namely that central planners are omniscient. For
instance, in deciding on a national minimum wage, the politicians and bureaucrats seem to assume they know more about all
the businesses that would be affected than the individuals who actually run them. They seem to think profits can always take
care of a significant wage boost with minimal hurt to owners deserving what they lose, end of story.
[Emphasis mine]
“As a matter of fact, many businesses will not be able to accommodate such a large hike from the
current minimum of $7.25 an hour without desperate struggle or closing down. Other accommodating options would likely include
laying off the least skilled, least experienced, least productive workers earning less than what Biden wants.
“Automation might then compensate, or possibly those in charge will reduce the overall size of the
business or hang up on expansion ambitions. Most minimum wage workers are young, low-skilled, just starting out and, according
to some research estimates, most move on to more rewarding jobs within just a year. Once they and some others making less than
the $15 are let go by certain businesses, their skills are not going to improve, and it won’t be easy to find another
job.
"Some who keep the jobs will work part-time instead of full-time. It’s already the case that we are
in an ever increasing high-tech, automated society in which the least skilled suffer; the middle-aged white working class,
with manufacturing jobs ever more robotic as one factor, has been killing itself off at the rate of 150,000 a year with
suicide, alcohol and drugs. The less educated young are a high percentage of minimum-wage workers and stopping them at the
start of the race could keep some from even reaching the finish line.
“The new minimum wage could give us fewer businesses, too. The 1.3 million jobs that could be lost
according to the bipartisan Capital Budget Office is a data-driven estimate. It’s harder to estimate how many entrepreneurial
ventures will be stymied by having to pay at least that much per job from the very start, but it will happen.
“Right now, owing to the pandemic and business shutdowns, 100,000 businesses have gone out of
existence. Thousands more are teetering on the edge. Their collapse would be made more likely by a new, overreaching minimum
wage.
“Frightening unemployment will have fewer fixes. One alternative is to hike the minimum wage by less,
say up to just $10, but it’s a mistake in the first place to have national minimum wages because some states are
prosperous and can take it while others are not. Therefore, state and local minimum wages make more sense.”
[Emphasis mine] (Ref. 2)
The proposed raising of the federal minimum wage to $15 an hour would be a dangerous and costly
mistake. We are not talking about a ten or twenty percent increase in the minimum wage but a one hundred percent increase –
a doubling! What might make sense in the big city of Chicago, Illinois might well prove a total disaster in the tiny town of
Concordia, Kansas.
A $15 federal minimum wage is a misguided attempt to increase incomes. In reality, it would eliminate
jobs for workers with the fewest skills and the least amount of experience. Raising the federal minimum wage ignores regional
cost-of-living differences and disproportionately affects states with lower living costs. This proposed minimum wage increase
would create a limited number of winners who get higher wages, while the greater number of losers would end up with fewer hours
of work or no job at all.
The first workers to lose their jobs will Likely be individuals with disabilities, workers who lack
English proficiency, those with a criminal record, and young individuals with no experience.
On the other hand, a $15 minimum wage will benefit large corporations like Amazon, who already have
achieved a $15 minimum wage by automating lower-wage positions and which would benefit from competitors who cannot afford $15 per hour being driven out of business. The increased minimum wage would also benefit experienced workers in affluent areas where companies could afford to raise prices to cover the increased salaries.
Being hurt would be small businesses, mom-and-pop shops, and fast-food restaurants who hire more low-income workers and support local economies. Low-skilled, inexperienced, and marginalized workers (a majority of whom are female) will be the first to get laid off and will suffer the most from the resulting business closures and losses in new jobs.
A study by the Congressional Budget Office (CBO) predicted that if Congress were to raise
starting wages to $15, at least 1.3 million and possibly 3.7 million or more jobs could be lost by 2025.
[3]
The last thing that this country needs is a socialist-style government-managed economy! The best
way to boost incomes and opportunities is not by doubling the minimum wage! It is not by having the federal government
interpose itself into America’s successful free-market. Every attempt at a government-managed economy that has been
tried has failed miserably! The best way to boost incomes and opportunities for all is to continue to encourage and
support a strong free-market economy with low unemployment and minimum government bureaucratic interference. Never forget
those famous words: “government is not the solution to our problem, government is the problem.”
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References:
- Reagan Quotes and Speeches, Ronald Reagan, www.reaganfoundation.org,
Inauguration Speech of 20 January 1981.
- Federal minimum wage makes minimal sense, Jay Ambrose, The Ledger, 5 February 2021.
- The Truth About a $15 Federal Minimum Wage, Jay Ambrose, The Heritage Foundation:
Factsheet 186,
12 July 2019.
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