Levine is a sophomore politics major and can be contacted at firstname.lastname@example.org
#1 – The Minimum Wage Impedes Job Creation
The minimum wage, without a doubt, impedes on this nation’s ability to create jobs (specifically low productivity jobs). While the policy was undoubtedly created out of benevolence, it remains a fact that it is bad for job creation. Really, that isn’t all that controversial of a statement. “The American Economic Review,” “The Review of Economic Studies,” “The Southern Economic Journal,” “The Journal of Law and Economics” and “The Journal of Human Resources” have all published studies by highly regarded economists (such as George Stigler, Yale Brozen, and Ronald Ehrenberg) on the issue, and that list could continue endlessly. The only major study to really take issue with this claim was produced by David Card and Alan Krueger, who have been highly criticized for their work and statistical techniques.
However, the extent to which the minimum wage has a negative effect on job creation is much more contested. Nevertheless, the essence of the issue isn’t that difficult to understand. In a simplified manner, wages are the price of an individual’s labor based on the skills they have, how many other laborers have those skills and how many employers want those skills. If an individual is not highly skilled but rather has only rudimentary ones, the price for their labor is low. If an individual has a unique skill, the price for their labor will be high (due to the low supply of that skill and the assumed high demand from employers). The minimum wage is destructive because it artificially sets wages higher than what somebody’s labor might actually be priced; in this case, businesses have to hire less people due to the higher cost of labor.
#2 – The Minimum Wage Violates Right to Contract
In the Supreme Court case Lochner v. New York, the United States Supreme Court ruled that the “general right to make a contract in relation to his business is part of the liberty protected by the Fourteenth Amendment” and that “liberty of contract relating to labor includes both parties to it. The one has as much right to purchase as the other to sell labor.” While this decision was made in regard to the hours an individual can work, the principle should also be applied to wages. The right to contract should be in the hands of the individual. Let’s pretend, for example, that I am a homeless person in desperate need of money. I would gladly do the work of a janitor for five dollars an hour in order to provide myself with a means to eat. I know that at that price a business might be able to hire me. However, in actuality, the business I seek a labor contract with is forced to pay the minimum wage, and because of this they cannot afford to give me a job. In this situation, my right to contract and sell my labor has been infringed upon. But is it not the right of individuals to sell their own labor? Aren’t our skills and labor some of the most private forms of our property?
#3 – The Minimum Wage Is Unfair to Businesses
Although I’m sure most students here won’t care, the minimum wage is unfair to businesses in the same manner that it is unfair to the worker. It infringes on their natural rights to contract, and it also impedes on their abilities to maximize productivity.
As D.W. MacKenzie, a professor at Carroll College and writer for mises.org, puts it: “Employers pay a wage no higher than the value of an additional hour’s work. Raising minimum wages forces employers to dismiss low productivity workers.”
Obviously, this also relates back to the first point that the minimum wage impedes on job creation. However, the more important part of this intrusive policy is the infringement on individuals’ right to make a contract. I believe we have lost view in this country of what our natural rights are. Slowly, we are replacing natural rights as social rights — the former can never be taken away whereas the latter can. America needs to return to the philosophy that our government is here to protect our rights, not give and take them away. One step toward restoring this liberty is getting rid of the minimum wage. Hey, it might create some jobs on the side, too.