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The Hidden Cost of the Minimum Wage

By its very nature, the minimum wage law can never be effective. 

Where it is too low to influence wages in any industry, it will be moot, whereas wherever it is high enough to affect wages in any industry, it will cause a surplus of labor supply and a shortage of labor demand. 

Alternatively, in order to achieve a similar result, government could theoretically institute a price ceiling on the goods regularly consumed by the working class. 

However, this too would predictably produce the same result through a shortage, whether through quantity, quality or some combination thereof. 

Whether a price floor, by the name of a minimum wage, or a price ceiling, by way of a maximum sales price, the results are always identical: unintended consequences magnitudes of order beyond the wildest imaginations of the initiatives’ unwitting supporters; profound social, legal and economic implications outside the frame of hypnotizing propaganda; and devastating losses disproportionately incurred by those who can least afford them.

Ultimately, great confusion surrounds the minimum wage principally because academics, politicians and protestors preoccupy themselves and others with the nominal wage increases that are anticipated, rather than the real effect the law has on the flesh-and-blood employee who is no longer employable at that wage, or the flesh-and-blood candidate who is deprived of the opportunity that might otherwise exist below that artificial price floor. 

As it turns out, any level is too high for a price floor on anything, whether a good or a form of labor, as such a law stubbornly interferes with the manner in which resources are consensually allocated for the betterment of those who own the goods or services involved in the exchange. 

Ultimately, the lowering of prices has been the most effective means for empowering the greatest numbers of people to gain access to those luxuries which were previously enjoyed by only the wealthiest of society. 

The lowering of prices means lower prices for goods, services and wages, the latter of which forms one of the bases of the former. 

The academics, politicians and protestors all too often get lost in the numbers, where they forget that the numbers are merely representative. 

It is productivity and relative costs that we generally wish to improve in order to enhance the purchasing power of the average worker, which are naturally expressed in lower general prices as we learn to produce more with less, and incidentally we enable higher-order employment opportunities with progressively lower measures of risk and wider ranges of benefits, whose compensation follows from productivity and can appreciate or depreciate in real terms based on the productivity of the broader market. 

Because of the nature of higher-order enterprises, their compensation depends heavily upon the stability of the supporting market structure, whereas lower-order enterprises are better equipped to subsist amidst instability, as their skills, productivity and survival rely less heavily on trade; higher-order enterprises, on the other hand, depend exclusively upon trade. 

The higher the order of enterprise, the further removed it is from the inherent state of affairs, or the Robinson Crusoe economy, if you will. 

So while the risks are lower in terms of injury or death, viability is not remotely guaranteed, and in many cases compensation may be meager; however, where compensation for any trade or service is meager, those aforesaid risks of injury and death tend to be vastly mitigated or wholly eliminated. 

The reason that these factors are important is because low-skilled jobs with relatively meager wages tend to be under-appreciated for their advantages in the wild world. 

Whereas the human being could combat adversity in order to survive of his own might each day, economies of scale have enabled him to specialize in low-skilled labor in a secure, air-conditioned space to afford to survive unassailed with near-certainty each day. 

However meager the compensation, the willing worker demonstrates by his actions, regardless of his protests after he’s clocked out, that his arrangement is an improvement over the alternative. 

Unfortunately, the minimum wage law serves only to limit those opportunities over the foregone alternatives. 

And job losses aren’t the only cost of the minimum wage law: the law prevents jobs from ever being created below that level, which is essentially plucked out of thin air. 

Beyond this, the minimum wage law causes higher prices, but not merely in the manner that one might expect. 

Interestingly, wherever the minimum wage law hasn’t conspicuously caused a price increase, it has exacted this cost obscurely upon the economic system. 

Like an iceberg, there are far weightier implications than what appears at the surface to readily meet the eye.

Wherever the costs of the minimum wage are less conspicuous, the economic system bears those costs through the conveyance of savings into consumption; whereas the nominal wage increase for the employee amounts to a relatively trivial boost to income, it amounts to a potentially-sizable loss incurred by the employer across several employees. 

Moreover, the loss of savings to consumption, as wage-earners are disproportionately more likely to spend the marginal dollar than to save or invest it, exacts a cost on the economic system through the reduction of capital investment, which drags on productivity and future consumption. 

Minimum-wage advocates often focus on how much workers could earn instead of appreciating how incentives alter the decisions of those who comprise the market. 

They also fail to recognize that their policy could just as well call for something else in order to achieve the same intended end: they could call for greater measures of productivity, which would lower the costs of the goods we buy, thereby improving the real wages of workers. 

If the minimum-wage advocate understood this, or if he were really interested in improving outcomes through production, he wouldn't embark upon limiting employment opportunities by outlawing them; he wouldn’t sentence discouraged workers to lives of dependency upon a welfare state whereby they become pure consumers instead of producers gaining in skills, productivity and gratification as they materially improve their lives, and those of their respective families, instead of mindlessly consuming their way to the end.

However, the minimum wage advocate isn’t generally interested in effecting real change; he or she is interested purely in publicity, optics and political participation, whereby his or her camp uniquely stands to benefit in some twisted or calculated way. 

Whatever you do, whether you attempt to engage or ignore them, don’t allow their pedantry to hypnotize you, as their college-educated vocabulary serves only to deceive their unsuspecting victims. 

Like an infant who’s just learned profanity, protestors abound parroting smart-sounding, punchy phrases they don’t fully understand and fallacious rationalizations for ideas that aren’t their own. 

They’re pawns in a game they haven’t even studied, and yet they believe they’re in control. 

Reject them each time as they attempt to lure you into play.


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