Minimum wage

To start my politic ranting, I thought I'd start with the minimum wage. Something controversial, yet not all that important, right?

One view of minimum wage (taken by the right) is that pure capitalistic economics show that having a minimum wage is bad, bad, bad. If you're not worth the wage, you shouldn't be making it. It's an artificial limitation on capitalism and should have no place in society. If you raise the minimum wage, you make it more difficult to higher someone.

On the oposite side, you have people who look at those making minimum wage and say they need a "living wage". Can you feed a family on $5.15 an hour?

Here's how I see it. Both are right. (How's that for compromise?) Having a minimum wage does in fact cost jobs. Everything in this world is about money. If I, as a business man, have to pay someone more, there are only a couple things I can do. I can charge my consumer more, to make up for the extra pay. I can fire an employee so that overall I spend the same on employees, and either force the other employees to work harder or to replace the employee with technology. Either way it either hurts consumers by increasing the price, or it makes it harder to find a job. If you make the slippery slope argument, why should you stop at having a minimum wage at $5.15, or $6.65... I'd much prefer to make $40 an hour. What would happen to the economy if the minimum wage was set to $40? Inflation would take over until $40 was worth $5.15, and it doesn't help anyone out.

What would happen if I went the other way? Minimum wage is abolished. There would be some people who made much less. Would someone work for $1.00 an hour? I don't know. Maybe some teenagers.... I guess if I had to make money, and there was nothing left for me to take, I would work for that. What really would happen if we got rid of the minimum wage?

I understand that it is hard to raise a family on very little money. I have been richly blessed, and know that I won't fall into poverty, but that doesn't mean everyone has had as good a time as I have. Why can't we help those people by increasing the minimum wage, so that they can survive?

Well, first, if you increase the minimum wage, who does it really help? Over half of all minimum wage earners (53%) are under the age of 23. Less than 5% of all minimum wage earners are the sole breadwinners in their families. You are mainly helping those who are working at their first job. I guess that's not a bad thing, but does it help more than it hurts?

Here are my solutions. First, I haven't decided if I would abolish the minimum wage. I would need to get specific arguments for the abolishment before I get rid of it. My reasoning is it is good to have some minimum so people aren't exploited. (The same thing with child labor laws... I'm not completely anti-goverment.) We as a society can handle a little excess here. I would tie the minimum wage to inflation, and keep it fairly low. What if we tied it also to some percent of workers.... right now there are about 1.6 million people making minimum wage in the US. So, let's say that the minimum wage is adjusted up or down so that approximately 0.5% of Americans are making minimum wage.

Now, my solution to those who are making minimum wage who are trying to support a family... Isn't that why liberals want a minimum wage? To help those families? A detour, if you will....

I am not opposed to helping those in need. In fact, I feel it is my Christian duty to help them. In the ideal world, we as a community would help people, even when it's not mandated by the government (through taxes). I wouldn't even have a problem with the government forcing us to help (because it does strengthen the country if everyone is doing well). What I don't like is the waste in government. Of all institutions, I really believe the government is the least efficient. That is why, I think, many conservatives are seen as heartless. Not because we don't want to help, but because we don't want the government forcing us to give money to them so they can waste it. I would propose that we still help people, through the government, because nothing else will be tolerated right now. There is too much momentum in the government to change that over night. But, what can we do to cut down on waste? That is where most of my solutions will come in....

Okay, I'm back on track. One thing we could do is to attach money to head-of-households. Let me explain. What the current rise in minimum wage is trying to do is help those households dependent only on minimum wage. But, having a universal minimum wage covers more than just those who really need it.

If, after a family is deemed "poor", the government can help out by increasing their wage. Say a family really should earn $10 an hour (I have no idea what the proper sum would be, but this is just to show the idea). If the family has been deemed "poor", than the government steps in and says, get a job at minimum wage if you must. We will suplement your income so you actually earn $10 an hour. So, at $5.15 the government chips in another $4.85. Now, we can have a scaled system so that if the person gets a raise, than the government subsidy goes down, but not by as much. (this would encourage people to still work hard to get a raise). So, say the person gets a dollar raise, now making $6.15 per hour, the government reduces their subsidy by $0.50, so the person makes $10.50, and this continues until some set amount ($15.00 an hour?)

This encourages work, because if you don't work, you don't get paid. It also encourages working longer hours, rather than some minimum amount that you have to. It doesn't hurt the employer, or employee. It helps the person work their way out of poverty, without just a handout.

So, final analysis, is keep the minimum wage, but tie it to inflation and/or percent of workers on minimum wage. (Better yet, let the states decide their own minimum wage. You can even have a federal law stating there must be a minimum wage, but the states set it...) To help those who really need it, and only those, have government help. This would really be a job for the welfare people, keep it with them to simplify things.

So, where are the problems with my analysis? (I know there are some). Please leave comments so we can talk about it, and I will revise as needed. Thanks.