Many people advocate an increase in the minimum wage, on the grounds that the current rate does not enable employees to adequately support their families.
Some employers have found that, by paying above average wages, they can actually come out ahead, by reducing turnover, and by hiring better people than their competitors are able to attract.
I love to see it work out that way. But this is an entrepreneurial decision. If people are unable to focus on their jobs, because they are showing up hungry, that would also be a legitimate concern for the employer.
However, depending on the business you are in, and the niche you occupy in the marketplace, paying people as little as you can get away with paying might be the most profitable course of action. So employers who choose to go that route are not necessarily guilty of mismanagement.
There is also the feeling that some are impoverished, because others have way too much, and that increasing the minimum wage is one way to redistribute the wealth.
I do not believe the minimum wage even reduces inequality. Some people make more when the minimum wage is increased. Others see their hours reduced, or lose their jobs altogether.
I have heard people say they wouldn't mind paying a few cents more per hamburger, to allow McDonalds to pay it's employees a decent wage. But a given McDonalds that sees a 10% reduction in sales might be forced to close, even if most of its customers do continue to patronize it as before.
There are reportedly studies indicating that increases in the minimum wage generally do not significantly affect unemployment rates. That is probably true, given that these increases rarely go well beyond where the market has already set wages. Let's try doubling the minimum wage, and see how that works.
But even when the effects on general employment rates are negligible, certain hard to employ groups, such as the handicapped and convicted felons, are likely to be disproportionately affected.
Studies that focus solely on unemployment data also fail to reflect income that is lost due to employees' hours being cut, or the higher prices we all end up paying whenever the cost of production is increased.
What we are left with, is the argument that people simply need more money. If people need more money, let's give it to them. But let's do that in a way that does not punish employers for hiring people. How can we do that? I'll leave that topic for another post.
So where should we set the minimum wage? Given that it does not appear to serve a legitimate purpose, I believe the best idea is to simply abolish it.
