Quite a few years ago my then teenage daughter Alison and I were out on a date. My late wife Nancy was working late that night and so Alison and I were free to spend time together. While on the way I asked Alison, ”What have you been thinking about lately?” It seemed like a safe enough question to ask a high school senior who was nearing graduation. Alison emphatically stated, “The government should do away with the minimum wage law. If I spend my own money to set up a business I should be able to make all the decision regarding the business including what I pay my employees!” She continued, “If the wage I pay isn’t enough, and I can’t hire employees then the market will automatically set my minimum wage and not the government.”
Well, I was shocked. What ever happened to talking about prom dresses and special shoes? But I was interested because here was a seventeen year old concerned about the erosion of the free enterprise system.
There’s a new form of erosion taking place in our country; it involves the government raising the minimum wage level significantly higher, rather than gradual increments.
Some are cheering; some not. One might ask, “What’s necessary?” Is $8.60 per hour necessary? Well maybe, and maybe not. To those who benefit from the increase they would say, “Yes.” To those who lose their jobs because the cost of doing business has become too high, the answer is “No.’” To the business owner who goes out of business because of the increase cost of doing business, the answer is “No.”
So I ask an additional question. Will $12.00 per hour change some of the “No’s “ to “Yes’s”? Maybe. Will the $12.00 per hour change some of the “Yes’s” to “No’s”? What level is too high?
*Let me share what happened on the West Coast when the minimum wage was raised to $15.00 per hour. In 2015, the executive director of an eldercare program reported that some employees who’d received the increase requested the organization lessen the number of hours working because they were now making too much income and were losing their housing allowance.
What’s the answer? What amount is necessary?
To the employee, what’s necessary is enough to pay rent and buy groceries and spend some on clothing and other necessities. To the business owner, what’s necessary might be the amount necessary to hire good employees and to make a profit from his/her financial investment.
Final question. Who should make the Minimum Wage decision? The government? The Free Enterprise System? The “Yes’s” on both sides win.
Now you must make your opinion known. Mine is to keep the government out of small businesses.
I called Alison while writing this article to see if she has changed her opinion. After working in retail and food service, she is a very successful business owner in Clarksville, Tennessee. Her opinion hasn’t changed. Let the Free Enterprise system make the decision. Really, Alison? What ever happened to discussing prom dresses?
~Bob
[Notes on the above: Two arguments were made regarding the above $15/hr West Coast experiment. First, a study that modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way. Second, that, overall statistics show overall economic improvement when one includes wages for larger employers, such as Wal-Mart and McDonald’s. Excluding those wages of larger