Why Minimum Wage Doesn’t Work

When I first heard of a minimum wage, I thought it would be a great idea. After all, who wouldn’t like to have a guaranteed amount that, no matter what you do (provided you actually work), you get a certain amount of money? But, after I looked into it, a different story surfaces.

In the free market, an individual gets paid what he is worth. Let’s say you’re paid $7 an hour to dig ditches. You are happy and your employer is happy. But then, what happens if the government institutes minimum wage at $11 an hour, thinking (or so they say) that this will help the common man? Your employer doesn’t get any additional benefit yet is expected to pay you almost double what you were both happy with. He can’t afford to pay you and has to let you go. Are you better off now that no one can afford to hire you, or when you worked for a smaller amount? At least then you were getting paid.

Thomas Sowell in his book Basic Economics said,

“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed.”  

So, yeah, minimum wage might sound like a great idea, but like a lot of other government policies, minimum wage does not work in the real world.

I hope you enjoyed this blog post as much as I enjoyed writing it. If you have any questions or even pushback I would love to talk with you. Just put a comment down below or subscribe to my email list.


3 thoughts on “Why Minimum Wage Doesn’t Work

  1. Elizabeth Z.

    The implications of minimum wage are vast. Some that we’ve discussed as a family are price increases, fewer jobs, fewer employment opportunities for teens, and increased automation. I hope people in other states will realize what they will really get before the cast a “yes” vote for increased wages.

    Liked by 1 person

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