The Unforeseen Effects of Minimum Wage

991 Words4 Pages
The Unforeseen Effect of Minimum Wage On the surface, minimum wage seems like a good thing. The thinking that more money in an employee's pocket is a good thing is a no-brainer right? I'd argue no. There are different angles to look at, and even more inadvertent effects that have been realized. I'd like to steal a few minutes of your time to show you the unintended and unforeseen effects of this government interference in the private economy. There have been federal minimum wage laws since 1938, and every state except for five have imposed their own restrictions. While the stated reasons are benevolent and good-hearted in nature, years of research makes a very clear case that minimum wage is detrimental to the average worker and the broader economy. The economic argument against minimum wage is a fairly simple one. Minimum wage laws force an employer to pay its employees above a mandated level. On one hand, yes, this means that workers have more money in their pockets. It means they can now go out and spend money which will, in turn, stimulate the broader economy, right? Wrong! The higher wages paid by the employer have to be made up somewhere. In a free market, if an employer is producing a commodity, he will inevitably try to use the fewest possible dollars to make the highest quality products. This means that he will hire the best workers he can, for the lowest wages he can. This enables him to hire more workers, thus creating jobs and decreasing unemployment. It also ensures that he can put a high quality product on the market at a relatively low price. On the contrary, when the government requires that workers be paid more, businesses are forced to make adjustments in other areas to offset the added costs, such as reducing work hours, cutting benefits, hiring fewer people and charging higher prices. Naive lawmakers tend to believe, or at
Open Document