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Source link: http://archive.mises.org/6267/minimum-wage-a-tempest-in-a-teapot/

Minimum wage: A Tempest in a Teapot

February 16, 2007 by

MINIMUM WAGE: A TEMPEST IN A TEAPOT

What a wacky world we live in. An issue called the minimum wage fascinates the Pols even more than the price of meatloaf and 3 in the Senate cafeteria. Newspaper headlines hammer home this crisis in remuneration – I mean the minimum wage, not the price of meatloaf.

Forget that only 3% of hourly workers make less than the current $5.25. Only 13% earn less than the projected $7.25.

Forget that these are temporary, step-up jobs that are soon left behind.

Forget the fact that usually there’s a six month salary increase – 2 months at some fast food chains.

Forget that most of these young employees are single and probably live with Mom and Pop.

Forget the fact that entry level jobs in convenience stores in my town pay 8 bucks and more an hour.

And there’s a rumor around the Beltway that the 650 economists whio signed a petition supporting the legislation, all flipped hamburgers in their second job. I don’t believe it. On the other hand it’s hard to believe the proposed legislation has this kind of support.

But most of all, forget the immorality of the government interfering in the private contract between employee and employer. (In fact, you privacy guardians, why does the government even have access to that personal salary data? Must you report to them that you sold your neighbor your old couch in the den?) Does the government have the right – as they do with employers – to tell you the price you set on your home? Why not a minimum price law for the real estate market? I guess that’s next. You say it’s YOUR house? Well, it’s the Walton family and their shareholders’ store, isn’t it? It’s Andy Entrepeneurs’s hamburger stand isn’t it?)

I think of this Tempest in a Teapot every time I drive to my local Fried Chicken establishment where the starting salary is a buck OVER current minimum wage – and there’s a raise in 4 months and then another 2 months later. Down the street a convenience store ad says: help wanted, $10 an hour! Convenience store wages – entry level wages – beat fast food store pay in my town.

On the way to the fried chicken store I pass a large, glass-walled building called a health center. You can see right in there. What you see is hundreds of seemingly normal people literally working off their posteriors. With the aid of curious, nonfunctional machines they’re hiking. They’re skiing. They’re hoisting huge chunks of metal. As I say; they are working their posteriors off. FOR FREE. Nobody pays them anything and if standing at a burger store counter is remunerated at 7-8 bucks an hour – vicariously hiking the Alpine slopes should pay 50 bucks an hour. These seekers of immortality, with their pumping, pushing and pedaling in the glass walled factory, are generating enough electricity to light up Chicago. And they’re doing it for free!! In fact they’re payers, not payees. It is grossly unfair. Shouldn’t our benevolent government forge a law to shield them from themselves? How ‘bout a minimum wage paid by the Health Center? Like I say, it’s a wacky world.

{ 6 comments }

Brad February 16, 2007 at 3:29 pm

Perhaps that’s why there’s very little blowback, just all juicy “doing something” headlines. If the main argument against minimum wage increases is that it throws people out of work, then it’s just a small % of the 3% who currently make less than minimum who are affected, and those who employ such labor may grumble, but who listens? And the world doesn’t fall apart (yet). So the Pols grab big headlines, warm fuzzies are had all ’round, and a sliver minority of employers and employees are affected, and very few Pols or Main Stream Media are going to pick up on the misery of there minorities.

Also that’s probably why there’s little real defense against the increases because you’re only going to look bad.

Joshua Katz February 16, 2007 at 8:41 pm

What? An article I generally agree with, except for this climbing Everest nonsense. If flipping burgers pays $7-$8/hour, this doesn’t mean anything about the pay for climbing Everest. Price doesn’t depend on the inputs but on the value others will pay for. Yes, yes, he was kidding, but can we allow bad economics even in jest?

ted roberts February 17, 2007 at 10:13 am

Joshua, yeah you’re rite, a joke. But if we can joke about cancer and death and taxes, we can laugh at bad economics too. And don’t you think that someone would pay you more to climb the south face (my most difficult climb) of Anna Pura than turning burgers at the hamburger store. Bet they would. regards and thanks for your comment – ted

Matthew February 17, 2007 at 11:42 am

An overlooked point about the minimum wage is that increases would be irrelevant under a 100% reserve gold standard. With prices under such a regime gradually falling over time, all these nonsensical wage issues (and unions) would be banished to the dustbin of history. We can dream, can’t we?

gene berman February 19, 2007 at 6:03 pm

I did as little research into “illegals” in my particular area.

Most, apparently, get between $12-16 an hour; kitchen workers get about $9-12; many work “extra” when not at a more regular job and get about $10.

Many are semi-skilled, most (skilled or not) very willing workers. There are, apparently, underground sources for numbers from 1 to 20 or more and in a variety of specialties. Actually, some are legal–wages are similar but harder to come by because in great demand.

I was told a story about a young man who managed to get some money to begin building on some ground at the Jersey shore, built a sample and sold all 20 before completion, in the over- $500,000 range. According to the story, they were all done with illegals, sold in less than 3 months, and he took $2M in profit back to school with him.

That reminds me of another story. I met a guy in ’79 or so who’d just graduated from U. of Mich; his Dad was a fairly prominent real-estate broker. He bought Ann Arbor fixer-uppers and single homes, producing student housing for rental. Originally he asked his brother to partner but the brother (a year older) didn’t want to–but worked on the houses with him for pay. As soon as rentals brought in enough, he’d buy another for as little “down” as he could. In the 4 years, he’d accumulated somewhere near $15M in value, bringining regular rents, though with less than 5% equity at the time. He was retired from the business but collecting rents and selling RV sites for a national chain (at which he did very well). Some guys are just good at “putting it together.”

ted roberts February 19, 2007 at 9:11 pm

Gene, Yeah all above minimum wage. It just doesn’t affect many people. The politicians just wanta display their warm- hearted love for the indigent with our money. Means nothing. Just PR for pols. Thanks for your info. ted

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