Pricing Them Out of the Market

Increasing employer costs without increasing productivity in the employee. If that isn't a "recipe for bankruptcy," I don't know what is. Unfortunately, the politicians who passed the law that raised the minimum wage don't see it that way. "The national minimum-wage rises today from $5.85 per hour to $6.55 per hour." In other words, Uncle Sam today arbitrarily increases the cost of employing low-skilled workers by 12 percent." So now employers must cut their lists of jobs that minimum wage workers can be hired to do by at least that much. To do otherwise would simply cost them a lot of money, with no way of recovering it, except to raise their prices--which is hard to do if their competition do not do likewise (and we all suffer if they both raise their prices). So this new law simply makes it harder and harder for kids to get "summer jobs" or for people entering the work force to get a job from which they can learn a skill that will get them more money in the future. The people who pass such laws want you to think that people with families are working for minimum wage. Not so. Not in the main, anyway. Mostly, those earning minimum wage are those with NO skills to offer. The reason they have no skills is that they made bad decisions early on in their lives and are now suffering for it. Should we now reward their bad decisions by paying them more than they're worth? Not if we want to stay in business, that is. So such laws don't help anyone. They merely increase unemployment among those who aren't worth any more money. How does that help them? The purpose of employing people is not to "give them jobs" even if they have no skills. It is to hire people who can do the work required by the business. If they can't, they're worth nothing to that business and will not be hired at a price they are not worth. This law is just "pricing them out of the market." (Café Hayek)