We do not need polls, advice columns, or politicians sputtering, the economic data is compelling. When a minimum wage is imposed, it excludes the very members of the society that need a first job. Further, it treats employers improperly making them fund socialist benevolence via an unequal trade with their employees.
How so? Businesses take a product and convey it to customers. Done correctly there must be a profit so the process can continue. The employer trades money with employees for their productivity in this process.
If the value of the employee productivity is less than the money the employer gives the employee then there is an uneven trade. Both employer and employee must prosper for the relationship to continue. The employer must pay enough that employees can exist while employees must give employers enough productivity that customers are satisfied by quality and price.
Further, customers decide how much they will spend so prices must conform to customer behavior. Therefore, if the cost of the product including the cost of the employee productivity is more than the customer is willing to spend, the customer will not buy. Often businesses will fail. This is Economics 101.
So when the government forces employers to make a bad bargain of paying employees more than their productivity is worth one of two things will happen: the loss is passed on to the customer who is free to buy or not because the product costs more than it should. Customers are free to buy from any vendor so employers who lower the employee cost can lower purchase price.
The second thing is that some employers may mechanize to keep from paying more for the employees than the employees can deliver in productivity. This is an adaption many businesses have used because of the minimum wage laws. Currently, many low-skilled jobs have been mechanized or moved off-shore.Read full column