Why increase minimum wage? (Part 2)
Aug 21, 2013 / 5:00 am
For Part 1, please click here.
The reality of the market is that 10 high-paying jobs are less valuable to society than 100 low-paying jobs. The other issue is that, when these topics are discussed, we always tend to focus on the lowest possible wages and least fortunate. However, in a society where there are more jobs, despite the lower wage, it would also free up capital and create more consumers on a limited budget. That market, as it opens up to the retail world, would force supermarkets to try and lower the cost of their products to appease those specific customers. In that case, everyone wins. If we continue to prod at inflation by increasing minimum wage, we only further strangle middle-income families who need basics like food, but also expect luxuries like cell phones, a second vehicle, or even a second home. These all vanish in the higher minimum wage market, which is part of the reason why there has been such an enormous economic struggle in the first place.
Yet many would argue that eliminating minimum wage would create a wide disparity between the rich and the poor. This theory is credited to the fact that companies would pay people peanuts, and overcharge them for basic consumer goods. So now we all make $5 an hour and a loaf of bread is $20. It is a common argument, but lacks substance in that every other aspect of the economy would stand to lose if that were to happen. If a bread company decided to gouge prices on essentials, it would force a huge portion of the population to surrender their luxury goods. The companies that make cell phones, or MP3 players, or luxury vehicles would then be left to fend for themselves. That would, in its own way, put pressure on any overly greedy retailer to drive prices down to sell the most product to the most people and, in doing so, make a decent profit.
So now we've reached the final stage of the case for profit. Most would say that large companies should forfeit huge swathes of their income to higher corporate taxes or more social responsibility. The thing is, with the way our society is currently operating, companies are already assuming social responsibilities voluntarily. Coca-Cola's sophisticated distribution system in Africa was utilized by the Global Fund to dispense vaccinations for AIDS, Malaria, and Tuberculosis. The Gates Foundation, largely funded by Bill Gates' profits from Microsoft, has also done plenty of work with poverty and disease issues worldwide. The Giving Pledge, an organization also founded by Bill Gates and billionaire Warren Buffett, was created as a means of allowing the wealthiest people in the world to allocate their excess funds in the most meaningful way possible through respected charitable organizations.
There will always be corporate fat cats and raiders that endorse reckless, predatory behavior. That cannot be regulated away by a bureaucratic governing body. It is, in fact, encouraged in such an environment because government legislation can favor one industry or company over another, which eliminates competition. The market is prone to failure, which means that it is also prone to improvements and benefits to the consumer. The government cannot fail. It can only reform, over and over again, until there is nothing left but immeasurable debt, a defunct regulatory board, and no business to speak of.
Raising minimum wage is a lose-lose situation regardless. Using mandatory wages as a tactic to somehow increase wealth is like ripping a $5 bill in half and saying you have $10. If it actually worked, why don't we just raise the minimum wage to $1000 an hour for everyone?
Or, better yet, why don't we lower the burden of mandatory taxes on every citizen? My guess is, you won't see that happen any time soon.
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