Do we really need a minimum wage?
If minimum wage were eliminated, the only jobs that would be affected would be ones that overpay unskilled workers
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The final argument, that citizens should not be treated so poorly as to receive a wage of $7.24, is not based on economics but on the moral standing of those in favor of minimum wages. They believe that a resident of the most powerful country in the world should not have to worry about living comfortably. While I agree that basic services should be provided to those in need, who administers these services is a major question. Those that are pro–minimum wage believe that the government should be the one granting assistance, in the form of artificial wage rates. Governments are hardly the only ones able to aid the poor and destitute.Skip to next paragraph
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Indeed, in the episode of 30 Days I watched, Spurlock and his fiancée are able to furnish their entire apartment through a local church's donation center. They received dishes and kitchenware, a table and chair and even a couch, all for free. Other organizations, like Goodwill and the Salvation Army, also provide basic living materials at significantly reduced prices, because voluntary donations are the primary source of their merchandise.
The idea, however, that government can manipulate the economy for some without consequences for others is fallacious. Like many of the ideas behind state social programs, this one is based more on wishful thinking than sound principle. The other end of this issue relates back to the first argument. Those that are working minimum-wage jobs are not forced to continue on that path. If they develop skills that employers are willing to pay more to make use of, they will progress upward.
No discussion of minimum wages would be complete without mentioning their effects on unemployment levels. To keep things simple, let's assume a company has 10 minimum-wage workers for an total hourly cost of $72.50 ($7.25 × 10). If the minimum wage is raised another $0.70, that would raise the company's labor costs to $79.50 per hour. The problem is that, all things equal, the budget only allows for $72.50/hour.
The easiest thing to do in this situation is to reduce the number of people employed to 9, which would put the total hourly cost at $71.55 ($7.95 × 9), under the allotted amount of $72.50. This is not to say that increasing the minimum wage will automatically lead to increased unemployment. What it does do, however, is add one more strain on businesses.
Each of these arguments is fairly common in the minimum-wage debate. Without a solid understanding of the shortcomings in their logic, a defender of the free markets can appear naïve. It was as all I could do to watch the full episode of 30 Days, but I'm glad I did. It's not enough to know the principles behind the right way to do things; we have to be able to explain why government regulation is the wrong way.
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