Gov. Paul LePage’s call for restrictions on towns setting their own specific minimum wages doesn’t go far enough. The minimum wage should be abolished.
Hear me out.
The first minimum wage in the United States came about in 1938, and was 25 cents/hour. Adjusted for inflation, that would equal a little over four dollars an hour in today’s world. Today, the federal minimum wage is $7.25 an hour, and states are free to set minimum wages as they wish. Maine’s minimum wage, for instance, is a quarter higher than the federal minimum.
People making at or below minimum wage represent a very small segment of the workforce—only 4.3 percent of hourly workers and 2.6 percent of all wage and salary employees. Nearly two thirds of minimum wage employees work part-time. Over half of them are under the age of 24, and nearly a quarter of minimum-wage workers are teens. These, generally, are not people who are taking care of families.
Employers pay their employees because they are capable of producing the cost of labor. The minimum wage artificially inflates labor costs and shuts out workers who are unable to produce labor worth the wage, leading to an increase in unemployment rates of low-skill workers. A person who is only able to produce seven dollars an hour worth of product does not make sense to be employed at a wage of ten dollars an hour.
Furthermore, allowing towns to set their own minimum wages is just foolish and will do nothing to improve the situations of workers in those particular towns. A business cannot survive if it is forced to pay its employees more than what they are worth, and a company will simply move to a town where labor is cheaper if it seeks to stay in business. This puts the original employees out of a job, making their economic situation far worse than life before the wage increase. A town with a good-intentioned higher minimum wage is likely going to result in the opposite effect intended.
There are alternative ways to increase wages without government interference and mandates. In North Dakota, an influx of industry coupled with a relative lack of workers has resulted in increased wages throughout the state. A WalMart in Williston, N.D. was advertising a starting wage of $17.40 an hour for cashiers—while the state’s minimum wage is currently ten dollars lower than that. Even the non-oil rich parts of the state have seen higher wages driven up by the booming economy, not by state laws. In Grand Forks (in the eastern part of the state bordering Minnesota), a local burrito chain was offering jobs at $12/hour. A comparable job at a McDonald’s is paid approximately 20 percent lower than this rate. Again, this all happened without the government ordering businesses to pay higher wages.