Now, everyone is a loser…
We grow up thinking we have the freedom to be paid, but there’s no freedom in it at all
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The Problems with Minimum Wage For Business Owners
There are four reasons why minimum wage is anti-business at its fundamental core.
Minimum wage for the business owner is just a tax on a tax. The business is forced (which is to say, it is illegal for him to not pay money even if it’s agreed upon in his contract with his workers) to incur an expense at a rate that he does not set. Similar to the government extorting their cut upon your work, the bad employees who have a legal right to obtain pay are doing the same. How many jobs did you work out where a coworker spent half their day online shopping, playing solitaire or perfected a scheme that caused them to do a little less work? The business owner loses the money whether the money regardless–before income tax!
Moreover to the first point, is the added cost that the business has to incur not from the tax, or even paying the wage itself but the accounting that is now involved to manage this task & all the new administrative tasks that follow. The business may have to contract expensive accounting services out to manage the costs. Even if the entrepreneur decides to do the books themselves, they are taking away from time that otherwise can be spent on perfecting their good or service.
Thirdly, the business owner is fundamentally deprived of the freedom over his own business expense. He/she lacks the freedom to commit austerity measures and tighten spending for the health of the business. He lacks the autonomy over the business to establish contractual agreements with his employees. When he is forced that “a job” regardless of task or ouput, warrants a minimum payment & he has no choice to not comply, he effectively is not in charge of his own business’ welfare. What if the business owner sat with his employees and said I’m going to pay you less for 3 years because on the 4th year we’re all going to get a great pay-day. Even if everyone is in agreement, the government forbids it.
The last reason is because it tilts the uneven playing field even steeper. For the aforementioned reasons, the small business owner can no longer compete with the large cooperations who can afford (and I suspect are often in on the decision making of) a minimum wage in the first place. It’s as though the mafia destroys a little bit of your property bit by bit, after awhile, you’re out of business. They are priced out of the economy and the large fish continue to swim on–until there’s only a few state-controlled companies and no local economy (because who the hell can afford it?). Minimum wage always leads to centralized wealth and power into the hands of a few–and it’s not going to be the people crying for more money…
If you want a truly level playing field you would remove corporate income taxes (for the ultra poor & ultra wealthy) and minimum wage requirements. Let the best win.
So, you’re saying you hate the employees?
Contrary to popular belief, this mandated payment hurts the employee the most for five reasons.
First of all, its in his/her interest that the business & their employer, survives. To retain checks in the mail, it makes sense that the business itself has more money to spread around & to offer him/her an opportunity to receive enhanced employment opportunities. A business mandated to pay extra wages has to come up with it from somewhere on the books–if the business has to accommodate this extortion, it may have to lay people off to do so–or worse yet, fold altogether, leaving everyone unemployed. Destroying the number of businesses ultimately means destroying the number of jobs to go around.
Secondly, the employee has their opportunity to prove them self as a hard worker or a skillful individual forfeited. Years ago, the worker who is particularly skilled or motivated had an opportunity to prove them self to earn their wage increases–others who saw this would do the same. Aside from creating more self-fulfillment in the population, more productivity will be generated. As long as the individual retains the right to choose their employment & prove their individuality to be “worth it”, this employee will be forced to find their forté instead of bouncing between a chain of Starbucks jobs. However, now a minimum wage robs the worker from his/her right to produce according to market demands or their interests. It sets in stone his value BEFORE his production. This is contrary to a meritocracy since the worst are paid fairly & the best are paid the same. What’s there to gain for the employee?
Similar to the last point, if they had the freedom to work for less, than there would be a tighter relationship created with the business entity and themselves. It would involve negotiation, compromise and specificity. Their role would therefore become critical in the survival of the whole enterprise because they, their colleagues and bosses were all responsible for the success. Right now, there’s a major disconnect with the employer and the employee. People do not “feel” like they are part of, let alone responsible for the success of Wal-Mart, Safeway or McDonalds. They are a disposable, anonymous pawn. A badge number. Baked into the company liability books as fixed costs with no identity or character. There’s a joke that says, “Employee of the month is a way of telling someone they are a winner and a loser at the same time”. Read our article. Nobody is willing to protect anyone from robbing the store
Inflation. Inflation is largely related to spending or the velocity of money. You could print up a billion dollars for everybody but if nobody spent anything, there wouldn’t be any inflation. However, the minimum wage is an excellent way to circulate more and more currency units chasing fewer and fewer goods & services. It’s a clever way for the debt to be inflated away for the government while people are fed the illusion they are “making more money”. In reality, the fresh new dollars will be worth less relative to the items that we all buy. The money may be free, but the cost of gasoline, eggs and rent is not.
Lastly, many college kids take to the streets demanding they are “paid what they are worth” not realizing that isn’t how the economy operates. To ensure a business will survive, it must pay out less than what your work generates. In other words, if your time is worth 20 dollars, than the boss is only going to pay you less than 20 dollars, otherwise your work will not generate the owner a profit & there’s no reason to keep you on as a worker. What happens if the government mandates that you’re going to be paid 20 dollars even though your output is only worth 20 dollars? The business owner can either increase the quality of the product (but there’s no employee incentive to do so), they can lay the person off or they can do what most businesses do, they trim. A business may cut your work hours, they may cut your benefits, they may expect you to cover costs yourself. As I said, the money has to come from somewhere and when it’s not feasible to come from the business books, it will end up coming from the employee one way or another.
And none of this is radical or out to lunch–it’s happening before our own eyes. Ask anybody on minimum wage if it is “enough”. Ask them if they are where they want to be financially. You already know the answer. Perversely, the instinct for these employees is to demand more money, which is to say that the minimum wage is increased–rather than have it abolished altogether.
Both businesses and workers need the freedom to succeed, involving a third party is the problem.
Government Distortions
President Obama mandated (which means that the business owner is facing either a jail cell or a bullet to the brain) that full-time workers must have their insurance paid for by the business. Well ain’t that something…
A study by economists from Harvard and Princeton indicated that over 94% of the 10 million new jobs (& increase in rate of jobs) created during the Obama era were temporary positions; the jobs were temporary, contract positions, or part-time “gig” jobs in a variety of fields & sectors.
In Great Britain, the law to introduce the minimum wage was passed in 1998 by the Labour government and it came into force the following year. It started at £3.60 for those 22 and older, and £3 for 18-21 year olds. Isn’t it strange they’ve had to raise the minimum wage so many times? Hm. I wonder why that could be…
I am reminded of the Soviet saying from the factory workers, “They pretend to pay us, we pretend to work”. A beautiful catastrophe.
Closing
Overall, the fact minimum wage exists at all should be an insult regardless whether you are a business owner or employer–the presence of a third-party telling you what you can do (& to what extent) infringes upon your freedom as an individual entity with skills, motives & desires of your own.
Minimum wage is a terrible concept supported by big government and socialist ideals. It introduces a third party to use coercion against companies or entrepreneurs looking to seize opportunity. It robs the business from it’s profits, control & it’s relationship with it’s employees. At the same time, the employees are robbed from competition & thrown into an unpredictable life of lay-offs and unemployment. Together this creates the narrative that everyone is equal on a low-level and aims to create a bi-class system. As the saying goes, all animals are equal, except some animals are more equal that others.
This coercion widens the gap of social inequality by accelerating the riches to those at the top (those who set policy & write the rules) and squashes the wealth creation of a few destined for the many. Everyone benefits if someone creates the new Iphone or Twitter, but they need to freedom to do so.
We have reached a point in the global economy where bankrupt governments are destroying everything in its path as they seek to leech all the blood they can still get. The currency is destroyed (inflation), the relationships between businesses and employees are destroyed (culture), hard work incentives are destroyed (economy) and free market competition (capitalism) has been destroyed. We are on this hamster wheel of government-created problems being treated by government-created problems–and few see the culprit as the third party itself. We would all have more options in life and be more free, happy, self-developed & wealthy if the minimum wage was entirely abolished.
#StayOnTheBall
