- 76% of Americans support raising the minimum wage to $9 (Nov. 2013)
- 80% of Americans support raising minimum wage to $10.10 (July 2013)
How does today’s minimum wage of $7.25 compare to 1938? At $7.25 an hour, today's minimum wage is higher than the inflation adjusted wage in 1938 ($4.08) and the 1938 - 2013 average inflation adjusted wage ($6.60) per hour respectively. Today’s minimum wage is however lower than its peak inflation adjusted wage of $8.67 realized in 1968.
Before expounding upon my beliefs on minimum wage, I want to clearly state what I am for and against.
I support:
- Increased economic prosperity for all, especially those given the label as low income earners by the U.S. Government
- Equal treatment
- I support men and women of all races, ages, religious preference, etc. be given fair compensation for their contributions, as well as equal opportunity to maintain and improve their standard of living
- Greater local influence
- I support state, regional, and local enactment of public policies rather than a one size fits all system as our federal government prescribes. I believe the State of Minnesota has a better idea what is good for its constituents than politicians in Washington D.C. Similarly, I believe public officials in Bemidji, MN have a better idea what will best serve residents of Bemidji compared to state politicians.
- Freedom
- I support individuals having the opportunity to decide for themselves what is best for them. Similar to greater local influence, I believe individuals are in a better position to decide what is best for them rather than politicians miles away.
- Long term sustainable growth
- I support sustainable initiatives designed to create long term economic prosperity. Short term prosperity can be achieved at the expense of long term growth, however I believe this is unsustainable and foolish.
- A good example is consumer debt. You can acquire any number of products and services on credit. Here you agree to short term gains (car, house, phones, TVs, etc.) in exchange for reduced long-term growth (any growth will be going to your debtor plus interest). This is great in the short term, but, ask anyone with large student, credit card, and housing debt their outlook on their long term growth and you will likely see this principle first hand.
- Wages linked to current and potential productivity
- I believe a worker's wage should rise and fall based on his/her productivity. For example, if George can make 20 widgets per day while Fred constructs only 5 widgets per day, I believe Joe should be given a higher wage than Fred even though they are technically doing the exact same work.
- NFL draft picks are an example of potential productivity. They are paid millions of dollars with the hope they will perform in the NFL. Thus, they are being compensated for their potential (rather than actual or current) productivity.
- The voluntary exchange of labor for wages will only be sustained while a worker’s productivity (current or potential) is equal or greater than the worker’s wage.
- If it costs Widget Workshop $10 to make a widget (excluding labor costs) it can sell for $20, Widget Workshop will not be able to pay Joe more than $200 per day (20 widgets x $10 profit = $200) nor Fred more than $50 per day. If Widget Workshop paid higher wages than these, it would operate at a loss and eventually become insolvent.
What I am against:
- A person’s value linked to their income or wealth
- I believe a person’s value is God given. I believe all people have been created in the image and likeness of God (see disclaimers) and therefore have been graced inherent value. A value or love from God that cannot be increased nor decreased. For this reason, I am against linking a person’s income, net worth, fame, etc. to their societal or individual value.
- Social engineering/Central planning
- As a general rule (some exceptions do exist such as pollution) I believe federal government involvement should be minimized in the affairs of individuals and private businesses. (See freedom above)
- Social engineering effectively tells people: “You do not know how to manage your affairs, but I do. Therefore live your life as I tell you.”
- American entitlement
- Please remember I am for increased economic prosperity for all, especially those who the U.S. Government has defined as low income earners. This being stated, I am against Americans being entitled to higher wages and standard of living on the sole basis we are an American.
- I find it ironic how passionate Americans are to remove the income inequality between men and women, yet there is little passion to remove the income inequality between Americans and citizens of other countries. Similar to supporting a woman receiving equal compensation for doing the same work as a man, should not an Eritrean receive the same cost of living adjusted wage as an American for completing the same task?
- Politicians in Washington D.C. believing they can successfully run a business
- From what I’ve seen they spend more time spinning issues and spending money we don’t have ($17+ trillion in national debt and rising) than promoting sustainable growth.
- Politicians acting as demagogues
- Politicians should not be acting under the influence of lobbyists, political elites, and faulty public opinion. Rather, politicians should be making well researched and informed decisions that benefit a super majority (75+% of the people).
Whether you are part of the majority who support a minimum wage increase, or the minority who does not, I encourage you to take the additional step to determine what effects you believe the minimum wage has on individuals, businesses, and society. A large body of conflicting research already exists. My next post will attempt to summarize my own findings.
Next Blog Post: Minimum Wage Part II: Individual, Business, and Societal Effects
