Economics

The $33/hr minimum wage?

The higher the minimum wage for unskilled positions, the more attractive automation becomes (Picture Credit: Shutterstock.com)

As of January 1, the minimum wage in New York City was boosted to $15 an hour, a more than doubling of the $7.25 minimum wage of just six years ago. Three days later The New York Times published a piece with the provocative title:

The $15 Minimum Wage Is Here. Why We Need $33 an Hour.

Author Ginia Bellafante didn’t exactly demand $33 as a new minimum wage or at least didn’t set a timetable to reach that number. She did argue that the new $15 minimum wouldn’t do much to meet New York City workers’ needs and “the war” for an adequate living wage had to continue. Bellafante cited a report by New York’s largest food bank, City Harvest, which calculated that a “single parent with two school-age children…would need to make nearly $69,427 a year” which works out “an hourly wage of just under $33.”

But is need a good basis for a minimum wage? If a single mom needs $33, a married couple with two kids could get by with just half that. So maybe $15 is a good number after all? But then what of that single mom? And what if, instead of just two kids, she had four? Then she would need a lot more than just $33, so should we be looking at a $50 minimum wage, or even higher?

If you see a problem with that idea, you’re recognizing something that many minimum wage proponents do not – that the basis for wages isn’t employees’ needs.

Consider our own buying habits. We don’t buy a car from Ford because Ford needs the money – that’s not a consideration. When we head to Safeway and find out that a dozen bagels are on sale for $5 we might buy them. But not at $10 a dozen – they aren’t worth that to us. So whether we buy them or not depends on what value they return to us for the money we have to hand over.

It’s no different when employers buy labor. They aren’t buying our labor out of a charitable impulse – they are looking to get good value for their money. And like us, if something is overpriced, they aren’t going to buy. That’s why a minimum wage of $50 would be disastrous. Many of us aren’t worth $100,000 a year to an employer so if $50 were the minimum wage, we would be out of work. We would be unemployed because our labor was overpriced by government mandate.

While $15 is a lot lower than $50, not everyone is worth that either. Unskilled workers might not be able to produce $10 or even $5 an hour of value, or at least not until their employer trains them. If the law says they have to be paid $15/hr that makes them unemployable.

It may not even be the unskilled worker who pays the price. Take as example a business that employed high school students at minimum wage, and also employed a single mom who made a bit more. When the owner needed help running the business he began training the single mom to become a manager, and increased her salary to go along with the new responsibilities. Then the minimum wage went up and the owner had to increase the pay of all his high school students. That money had to come from somewhere and the end result was that the owner had to let his manager-in-training go, because he had to use her wages to pay the students. This government-mandated increase, legislated as a means of helping the poor, didn’t help here. High schoolers who had already been happy with their wage got more, but a single mom lost a good job. The government might have meant well, but they didn’t do well.

There is a Christian case to make against the minimum wage and any number of verses could be cited. Prov. 14:31 tells us to be kind to the poor and Prov. 27:14 tells us that we actually have to be kind because mere good intentions are not enough. But maybe the best overall case is God’s condemnation of arrogance (Daniel 4:30) and idolatry (Ex. 20:3). When a government makes minimum wage laws it is making wage decisions for millions. It is presuming it can price the value of their labor better than they can themselves, and better than employers can. Governments, as of yet, understand that legislation can’t make people worth $50/hr. but too many believe it does have the power to make everyone worth $15. Our governments are trying to manage our economy in a hands-on way that requires them to be all-knowing and just about all-powerful. In humility, they need to recognize they are simply not up to that task.


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1 Comment

1 Comment

  1. Cora Muis

    January 30, 2019 at 8:04 am

    1. how about some stats showing how minimum wage hurts the poor.
    2. your Bible citations don’t really argue against a minimum wage. It argues more for compassion…
    3. Relying on employers to pay according to worth is a fallacy as they would rather keep $ in their own pocket — they are human sinners, after all.
    4. How many Ontario businesses went out of business because of their recent minimum wage increase. I know some people lost jobs, but I haven’t seen any stats about business closing.
    5. It is a poor example you made about the manager in training getting let go – logic tells me that a good business move would be to keep the more valuable employee, i.e. the one you already spent $$ on to train.
    6. How should we(citizens AND government) take care of the the poor- maybe that is another article.
    7. A raise for some makes the difference in many ways, for example, the stress of making ends meet is alleviated, they can afford healthier food, they can afford to stay home with a sick child or when they themselves are sick – saving the workplace, school place and the health care system $$.

    Thanks

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