Democrats Love Poor People – Which is Why They’re Trying to Make More of Them!
Raising the Minimum Wage Actually Makes Workers Poorer & Demonstrates the Risk America Runs in Allowing Private-Sector Freedom to Be Abolished
“The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities.” ―Ayn Rand
What Happens When the Government Gives Workers Raises?
When individual business owners are not free to run their own businesses, and the government can arbitrarily dictate their costs by giving workers an unearned pay raise, the first thing businesses have to do is to raise their prices to cover those higher costs. The result of the price increase is that there will be fewer takers for whatever product the business sells. Higher prices never increase sales among customers. Also, a higher price for labor means that fewer workers can be hired, since, likewise, a higher price for labor never works to increase hiring. In fact, in many businesses, the higher wage price will cause lay-offs. These are command-economy realities that cannot be wished away.
Businesses Can Only Exist If They Are Profitable
Businesses must run at a profit, the same way any private household must bring in more money than it spends. Also, in any given enterprise, the business owner is the last person to get paid (since, from a legal standpoint, workers, products, rent, utilities, and taxes must all be paid first). And the business owner is usually responsible for the financial well-being of family members as well as for his or her own well-being. We must never lose sight of the fact that businesses are comprised of individuals.
Fewer Customers Means Business Failures
Let us say that a certain area of town has ten restaurants, and there are enough customers to support them all, until the minimum wage increase arrives unbidden, and they all must raise their prices. Since higher prices work to bring fewer customers into these businesses—or will bring them in less frequently—sales decrease as a result. Fewer customers spread out over the same number of restaurants means that some restaurants, most likely, will have to close their doors. Thus, by mandating price controls on wages, the government has financially discriminated against, and indeed targeted, the free market, private employers, enterprising families, and free individuals.
Less Competition Puts Upward Pressure on Prices
Fewer restaurants also means less competition on quality and on price, and prices tend to go up more, in a less competitive environment, than they would go up if every business had been able to remain open. The more competition there is in a marketplace, the higher the quality of the goods and the lower the prices. Remember, if you have too much greed in a free market you will be punished by consumers, who will patronize your less expensive competitors. But, once competitors begin to disappear, due to government interference, prices begin to rise beyond what is needed to cover costs and make a profit.
An Aside About Price Controls & Healthcare
We are now seeing the tragic results of forcing price controls on the healthcare market. Due to rising prices that have come about, and due to the anti-competitive price-control policies of the government, it has become increasingly difficult for consumers to afford care, yet people are criminalized if they cannot afford to pay the high prices and, therefore, do not purchase care. The proper way to increase quality and reduce prices in the healthcare market is to use market forces. Any government entitlement in healthcare should give the people money—or vouchers—to buy healthcare on the competitive, nationwide free market. Price controls will always decrease competition, bringing higher costs, lower quality, and the rationing of care, which will, in turn, result in more misery, including death, as a byproduct.)
The Higher Minimum Wage Effectively Harms the Individual
The individual wage earner’s government-mandated increased wage forces higher prices for goods and services in the marketplace, which effectively cancels any benefit to the wage hike that was given. And some workers, as a part of the new cost-cutting needed for businesses to stay afloat, will lose their jobs.
Tax Increases to Cover the Increase in Unemployment
The higher unemployment that results from business closings means tax increases will become necessary, in order to pay the higher burden of support via unemployment insurance. This will now introduce a new financial burden to businesses beyond the wage increases already mandated. Again, their prices will be forced up, there will be more firings, more business closings, and ultimately more increases in government spending to cover the expense of offering government relief to those who are new to the ranks of the unemployed. This government-caused vicious cycle will continue, ad nauseam, until someone calls a halt to it, possibly by instituting tax cuts for businesses to re-institute hiring and business expansion, followed by a moratorium on the raising of worker pay by government fiat.
What Government Gets Out of a Minimum Wage Hike
What the government gets out of a minimum wage increase is more dependency among voters for relief programs. These voters, in the future, will feel more loyal to the government and will typically vote for politicians who offer to expand such programs. Even pay raises, after all, come from the government and not their employers. And if, perchance, your job is lost, it is the government who supports you—your prospects of finding a new job in the government-imposed economic contraction being slim to none.
Politicians can then purchase votes by promising free relief money, free food, free college, or what-have-you. But the truth is that, in actuality, nothing is really free. An ever-widening chasm between rich and poor results from the government’s disabling of the free market in wages and, as a result, the pricing system for goods and services that are impacted greatly by externally-imposed wage hikes. Upward mobility slows, and then regresses, widening the income disparity between rich and poor.
A Free Market Economy Is the Best Redistributor of Wealth
In a free market, the economy is free to expand. Every business owner is free to offer the wages he or she wishes. If no one takes a job being offered, the wages being offered are likely too low. Too many applicants would, likewise, signal that the wages offered are too high. Workers are free to turn down jobs whose pay they think is not enough, for whatever reason; and they are also free to take jobs from competitors who are offering more money for the same job. Businesses must, then, be conscientious about offering pay raises to retain their best employees. In an expanding economy, these are much more affordable.
In an expanding economy, job applicants often find themselves in the position of being extended multiple job offers. People feel less stressed and more free in such an environment. There is more upward mobility, and it happens faster. But the more powerful the government is permitted to become, the more regulated, more cost-burdened, and less free becomes the marketplace, since it is in the nature of government employees to manufacture rules and regulations that take time and money for businesses to discover and follow. All of this takes a human toll in increased human misery and more government dependency. Every ethnicity and every level of disability is affected. The decrease in people’s financial well-being and the time requirements necessary to mount a legal defense of their rights, as they work longer and harder to provide for their families, can only mean the endangerment of those rights, since there will be a decrease in the number of people who, given their more impoverished situations, are willing to spend time or money to defend their rights and freedoms.
The Infantilization of the People & Its Impact on Their Rights
The more a parental government begins to care for its citizens, cradle to grave, the more those citizens lose their independence, both in terms of personal finances and individual rights. After all, a parent does not award children rights, but privileges. Rather than the government serving its citizens and seeing its role as safeguarding their rights, citizens begin to serve the government, vying for privileges that others do not have, and citizens become divided against one another. Rights are converted into privileges at every level. And when individual rights are endangered by the growth of big government, every group suffers from the atmosphere of scarcity and divisiveness in the citizenry.
As Ayn Rand so wisely put it, “The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities.” And it is also true that those who would convert those rights into government-sponsored privileges and entitlements—such as government-forced minimum wage hikes—condemn us all, in the end, to government-enforced indentured servitude, where nobody has rights anymore.
Indeed, the minimum wage laws are merely a symptom of a much deeper problem, but it is a problem which must be addressed soon, lest we all become thralls of the state.
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by EagleRising.com
Yes, that's what raising the minimum wage does increases the cost of the goods or services to the consumer. It also prices you out of the global marketplace.
If you don't want to raise the min wage, then you have to change the tax code to pre 1980's, when people were allowed to deduct interest on credit cards, insurance, etc. Right now, at the current rate of inflation and the stagnant wage gains, the economy will not grow. But that alone will not change our current state of affairs. In real dollars the average worker has not made any gains, while their buying power has gone down:
The reality is, that some raise in actual income is needed for our economy to grow. Maybe based on COLA, and not an arbitrary amount. Also, when the min wage was enacted, it was meant to avoid kids from being abused from low paying jobs, like working at a fast food chain. Now adults have those jobs, and that has to be taken into consideration.
The problem with economics. is that neither Friedmanist nor Keynesian have it 100% right. We live in a mixed economy, and there is no one formula is going to work. Ayn Rand was not an economist, but rather a self promoter and had a profound disdain of anything she felt was socialist, since her family fled Russia. I take whatever she says with a grain of salt, especially since a lot of what she said she reversed later in life.
Well now thanks to Trump wages are finally beginning to go up again relative to inflation and cost of living and it had nothing to do with a federal minimum wage law and everything to do with tax cuts, regulatory rollbacks, and plentiful cheap energy. Companies voluntarily raised wages and gave bonuses based on real economic data and conditions.
what's the point in selling a product that no one can afford to buy?
And BTW, if you raise wages of the lowest wage earners obviously they will have more money in their pocket-- meaning they will be able to buy more-- not less!
Raising the minimum wages is a win-win: the lowest wage earning earn more; businesses see sales go up because more people would have more money to spend....( thus having more spending power!
That's true. The population rate is on track to have a serious impact on our resources and space. But as you say, there will be plenty of people around to purchase the products so what does it matter if people end up dying because of poor healthcare and wages. I'm sorta torn on the wage issue because I do believe that people should be able to pay employees their worth but I just don't trust republicans to do the right thing.
The fundamental law of capitalism is: When workers have more money, businesses have more customers. Which makes middle-class consumers — not rich businesspeople — the true job creators. A thriving middle class isn’t a consequence of growth — which is what the trickle-down advocates would tell you. A thriving middle class is the source of growth and prosperity in capitalist economies.
Our economy has changed, lest you think that the minimum wage is for teenagers. The average age of a fast-food worker is 28. And minimum wage jobs aren’t confined to a small corner of the economy. By 2040, it is estimated that 48 percent of all American jobs will be low-wage service jobs. We need to reckon with this. What will our economy be like when it’s dominated by low paying service jobs? What proportion of the population do we want to live on food stamps? 50 percent? Does this matter? Should we care?
Business people tell me they cannot afford higher wages. Not true. They can adjust to all sorts of higher costs. The minimum wage is much higher here in Seattle than in Alabama, and McDonald’s thrives in both places. Businesses adjust to higher costs, even when they say they can’t.
Our economy can be safe and effective only if it is governed by rules. Some capitalists actually don’t care about other people, their communities or the future. Their behavior, if left unchecked, has a massive effect on everyone else. When Wal-Mart or McDonald’s or any other guy like me pays workers the minimum wage, that’s our way of saying, “I would pay you less, except then I’d go to prison.”
Which brings us to the civic dimension of what the campaign to raise the minimum wage to $15 is really about. We’re undeniably becoming a more unequal society—in incomes and in opportunity. The danger is that economic inequality always begets political inequality, which always begets more economic inequality. Low-wage workers stuck on a path to poverty are not only weak customers; they’re also anemic taxpayers, absent citizens and inattentive neighbors.
Economic prosperity doesn’t trickle down, and neither does civic prosperity. Both are middle-out phenomena. When workers earn enough from one job to live on, they are far more likely to be contributors to civic prosperity — in your community. Parents who need only one job, not two or three to get by, can be available to help their kids with homework and keep them out of trouble — in your school. They can look out for you and your neighbors, volunteer, and contribute — in your school and church. Our prosperity does not all come home in our paycheck. Living in a community of people who are paid enough to contribute to your community, rather than require its help, may be more important than your salary. Prosperity and poverty are like viruses. They infect us all — for good or ill.
An economic arrangement that pays a Wall Street worker tens of millions of dollars per year to do high-frequency trading and pays just tens of thousands to workers who grow or serve our food, build our homes, educate our children, or risk their lives to protect us isn’t an expression of the true value or economic necessity of these jobs. It simply reflects a difference in bargaining power and status.
Inclusive economies always outperform and outlast plutocracies. That’s why investments in the middle class work, and tax breaks for the rich don’t. The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. Those at the top will forever tell those at the bottom that our respective positions are righteous and good for all. Historically we called that divine right. Today we have trickle-down economics.
The trickle-down explanation for economic growth holds that the richer the rich get, the better our economy does. But it also clearly implies that if the poor get poorer, that must be good for our economy. Nonsense.
Some of the people who benefit most from that explanation are desperate for you to believe this is the only way a capitalist economy can work. At the end of the day, raising the minimum wage to $15 isn’t about just rejecting their version of capitalism. It’s about replacing it with one that works for every American.
Great blog article. A good read. The title is so true.
Great blog article. A good read. The title is so true.
Just thought I'd point out: you just said 3 things. None of which is a good argument for your cause. I've seen this so often in online discussions...(In online discussions, merely saying you agree or disagree with an idea, without explaining why, doesn't make your point.
Why not go beyond this sort of "Me-too-ism" and actually explain why...?
A Free Market Economy Is the Best Redistributor of Wealth
Well if its so successful, its seems logical that many countries have adopted that system. And that as a result they are prosperous.
If that's the case, you should have no trouble coming up with numerous* examples of countries with:
1. A Free market economy
2. The results of those policies in each country ("best" redistributor of wealth, etc)
* no trouble coming up with numerous examples: But for the purposes pf this discussion, just a few will do!
Step one would be, of course, they'd have to admit there's no such thing as a truly "free market." In capitalist countries the goal is to make the market as unfree as possible. We just have to look at the constant push by giant corporations to monopolize entire segments of the economy to see that.
Only the rightwing could come up with a worn out slogan like the title of this article and use it to justify keeping people from having a living wage. And this isn't the only topic by far with a complete cognitive disconnect.
The minimum wage is much higher here in Seattle than in Alabama, and McDonald’s thrives in both places.
Let's consider standard of living for a moment. Below is a table of states ranked on that parameter. See if you can find where WA is compared to AL (it may be hard to read, so it's second from the bottom in the 3rd column):
A bunch of those blue states are now red. Also that doesn’t take cost of living into account. Even in California, several of the high income coastal counties have higher poverty rates and lower economic opportunities when cost of living is factored in. Some of the states more northern and rural inland counties (Jefferson) are much better off than they appear and have lower poverty rates when cost of living is factored in.
A bunch of those blue states are now red.
Oh? Show us your "data" . And you might want to actually educate yourself on what factors are used to determine standard of living assessments (cost of living factors in bold ):
The standard of living includes factors such as income, quality and availability of employment , class disparity, poverty r ate , quality and affordability of housing, hours of work required to purchase necessities, gross domestic product , inflation rate , amount of leisure time every year, affordable (or free) access to quality healthcare, quality and availability of education , life expectancy, incidence of disease, cost of goods and services, infrastructure , national economic growth , economic and political stability,freedom, environmental quality, climate and safety.
Always fun doing business on you, XX. I eagerly await your next response with facts (HA!).
This 'piece' is uh...……….lost.
Supply Side Economics is the greatest creator of poor people.
And...…...people having children who demand others pay for them.
Interesting piece. So.......what's the point in selling a product that no one can afford to buy?