The Definitive Argument On Minimum Wage

I’m getting sick and tired of reading bullshit about minimum wage, so this is what I want to do.  I’m going list and defend/attack each reason—that I’ve heard for or against the raising of minimum wage to a livable wage.  If after reading you have any other reasons please let me know and I will amend the list.

1. “I make about fifteen dollars an hour, and I don’t think McDonalds workers should too!”

I wish I could say this wasn’t something I had actually heard, but I have.  (A side note, I’m using McDonalds as the example because that is literally the phrasing I hear most of the time, I don’t know much about McDonalds pay practices, so please don’t take this as an endictment of McDonalds.)

I’m not sure if this is brought about from a place of superiority in a class sense, or the worker who uttered this feels they work harder so I’ll address it from every conceivable angle.  First, does someone working at McDonalds not deserve to survive if they work hard and full time?  This is essentially the implication here.  Secondly, do you think that you work harder?  Effort is relatively difficult to quantify, so perhaps this is a poor argument, and if you mean that you work more, well hourly wage should not come into account—unless you’re on salary, but for the most part this issue effects hourly workers.

2. “Those jobs were never meant to employ adults with families.”

Again, there are so many reasons why this is poor thinking (see what I did there).  We cannot expect jobs to retain their level of importance/pay/place in our economy as the world constantly shifts.  Once upon a time there were milk men, and cobblers, and blacksmiths, and they were needed in every town.  The economy changes as technology and everything else changes, it is clear by the fight for coal jobs, that this mentality of learning to adapt is difficult for certain lawmakers to follow, but it is essential.  Working in retail, or grocery stores, or fast food are jobs that have remained in our society by necessity, while other jobs have not. So this is the first part of the problem with this argument, the second being why does this mean adults with families don’t deserve to make a living wage?  Also it begs the question why are we so ok with paying non-adults without families less than a living wage?

3. “If we raise minimum wage our goods will cost more.”

Economists have argued that this is minimally true.  The thought behind the statement is that things will over inflate, but realistically any inflation would be minimal and inline with trends anyway.

So I won’t argue that this isn’t true, what I’ll argue is that it’s disingenuous.  This is why, if you are a parent trying to support a family (or half of a family because you have a spouse covering half of the burden) and you’re making an amount of money that is not enough to live off of, where are you making up the slack.  Food stamps, welfare, and other programs will help those people because the government isn’t in the ‘letting our citizens die of starvation and neglect business’ (not to say that it doesn’t happen and there aren’t large issues getting people taken care of).  Who is paying for those government programs?  The tax payers who are whining about a TV at Walmart potentially going up in price, are also the same people who whine about entitlements.  Heres the fucking deal when it comes to this particular argument, you can pay people a livable wage, and welfare, and food stamps and other ‘entitlements’ programs can remain for those who will still need them (which will be a greatly reduced amount of people) or you can keep paying for those taxes and shut the fuck up about entitlements.  End of that particular argument. 

4. “It doesn’t encourage people to work harder.”

I’m not sure if the people making this argument are thinking that raising the minimum wage will mean everyone gets paid the same, but I’ve actually heard this argument. I feel like the problems with this argument are self evident, so I won’t take much time to address it, but obviously minimum wage would not also be maximum wage.

5. “What about small businesses that cannot afford the increased minimum wage?”

This might be the most valid reason against raising it.  I do think there are options to deal with this.  Perhaps the higher minimum wage applies only to companies over a certain amount of employees (or for a certain period of time)?  Many start-ups can’t compensate very well so they offer other perks.  Also their is a significant amount of tax write off options for new businesses regarding loss.

Part of the reason why small businesses have a hard time offering higher wages is because they are competing with large (sometimes massive) companies in pricing, and if the large companies raise their prices due to minimum wage, it may help to make small businesses keep competitive pricing.  This piece is a bit circular in logic, but that’s because the problem is created by a similar circular logic.

Ultimately, this argument does still miss a fundamental point; paying people isn’t some charity. Of course there will be a higher profit margin if you don’t have to pay you’re employees, but ultimately you have a moral obligation.  Is anyone arguing for slavery? Not in the horrific way we’ve known in the past, but certainly there is an attitude of indentured servitude, when it comes to internship abuse, and the mindset of “I can’t make money if I pay people enough.”

6. “Why are they demanding $15?  That’s a big jump.”

I’m not sure where the actual living wage is in America, but I know a little bit about negotiations.  If I go to buy a car, I’m not telling the sales person my final number, and they’re not telling me there’s off the bat.  If I go in saying I want a Corvette and offer MSRP there will likely be no negotiation.  When it comes to getting better wages, I’m not sure $15 is the final number, but perhaps a starting point.  Bernie Sanders last year said “if you go for a full loaf of bread, you may get half a loaf of bread, but if you go for a half you may get crumbs.”  It’s really not too complicated and everyone on both sides of the issue plays this game in some area of life.
Now for some positive reasons:

7. “If you raise the minimum wage it will stimulate the economy.”

The lower classes tend to spend a significant majority of their money.  Those at the top are likely not to.  If those at the bottom begin making more money (for those making actual minimum wage this could be double depending on the state) they would be spending even more.  This will stimulate our economy much better than the richest people making even more money.  I’m not against those at the top making money, but if you made 50 million last year and make 100 million this year, do you think your spending is likely to double?  Sure it may increase, but certainly no where near the same percentage as someone who made $20,000 last year and makes $40,000 this year.  This is an important concept also because of the amount of people who are likely be able to spend double (or a smaller but significant percentage) versus the amount of rich people making more but not necessarily spending more.

As the economy increases due to stimulation this will eventually start to benefit those at the top as well. More people will have money to buy more of your stuff.  Think of it like trickle up economics, unlike trickle down it accounts for human behavior and nature.
8. “The average CEO 331 times what the average worker makes.”

This argument is not invalid but isn’t making the point you think.  We all agree the person running the company probably deserves to make more than the bottom level employees, the big difference is matter of degree.  This statistic and others like it don’t tell the story fully.  A better way of illustrating the disparity problem you’re trying to illustrate is to talk spending power.  Something like “the average worker at ABC company makes only enough to survive when splitting the rent with five roommates, and still requires financial assistance while ABC’s CEO Richard Head was able to buy the most expensive private jet in the market with his Christmas bonus.”  But it’s too wordy and not as catchy because people will have to read.  Ultimately the CEO ratio thing just doesn’t have the impact because there isn’t a clear real world example drawn of the impact.

If you have any other reasons for or against raising the minimum wage, let me know and I’ll add it to my list.

4 thoughts on “The Definitive Argument On Minimum Wage

  1. From a purist stand point, the main problem with a minimum wage is that it is the government instituting floor on the pricing of labor. As I learned in Econ 101, ceilings and floors on pricing always distorts the market. In this case, whether or not that is good or bad is the matter being debated.

    In regards to your first point, I would note that the same people who say that questioning CEO is class warfare but somehow know exactly how much some person at McDonalds should be making. If you look at it another way, the people making the arguement are not considering whether or not the position to which they are comparing is being underpaid. Part of this argument points out the crappy service that they get from minimum wage workers now. The thing here is that employers get what they pay for. If they offer minimum wage, they are going to only get people who give the minimum.

    One thing I don’t think you touched on is the fact that the labor market has been manipulated to the benefit of the employers. Unions are highly regulated and anymore it takes a miracle to form one and even then, the employees are forced to use an established corporate union. Unemployment is intentionally kept above a certain point because if goes below that threshold, employers start having to compete for labor which results in workers being able to demand higher wages and better benefits. Even entitlements play a role here because it allows certain employers to shift some of their labor costs onto the tax payers. Given how the labor market has been manipulated, why should we not raise the minimum wage?

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    1. Great points!
      I do believe that when it comes to the invisible hand, that since we’ve had regulation for decades and I do believe that bell can’t be un rung. I think that’s similar to what you mean when you say “given that the labor market has been manipulated.”

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  2. Mike, first of this was incredibly well thought commentary. This is a discussion we’re not having enough in our society. I’ve been fortunate enough to have had success in my own business, but I worked in the restaurant industry for years with myself and other guys making $10 or $11 an hour. These are hard jobs. Theyre back breaking, miserable jobs. Odds are you have to go to a second or even 3rd job just to barely survive. I don’t know how people do it. God help you if you’re an ex convict, how’s someone supposed to turn his or her life around after leaving prison when they’re making $11 an hour trying to support a family, working two other jobs, and not having a license because the state won’t allow him or her to have one because of the criminal record. During my hard times I’ve been lucky enough to have a family to help support me, but I don’t know how some of these other people do it. Because good jobs are really hard to findis these days. Honestly I think $15 per hour is too fucking low and that’s coming from a business owner! I take care of my guys because what’s right it right. I think it’s awesome that you took the time to shine a light on this issue

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    1. Thanks Paul! I think there are a lot of people from the late baby boomers to the generation right before us, who did not have such a hard time and think we’re imagining it, and so when they made $5 an hour it covered their costs, and so 3 times (or whatever the actual difference is) that seems excessive and unnecessary.

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