The Minimum Wage and the Left’s Economic Ignorance
by James Perotti
I like to think that the left is well-intentioned. I admire the fact that they are eager to see every individual live comfortably, which is a goal we share. Recently, the push for a government-mandated living wage has gained momentum, and has been implemented in some corporations and through laws under certain jurisdictions–like in Seattle and San Francisco. Whole Foods reports that since Amazon–its parent company–raised its minimum wage to $15 per hour, workers have seen their shifts cut dramatically (Guardian). Economists warned that blow-back from this policy would result in businesses funneling their employees the same amount of cash flow while simultaneously cutting their hours, forcing many business to choose between going under or cutting production, which also makes them go under. There are direct and drastic micro and macroeconomic consequences of implementing a minimum wage.
The minimum wage is an economic policy intended to moderate a consensual agreement for the value of labor. Free market capitalist–like myself–believe that the minimum wage is unnecessary because when corporations or laborers obtain an unfair amount of leverage in the market, the market will naturally going into recession–fixing the problem before inflating again, as Adam Smith’s invisible hand argues. In addition, when the government implements an overvalued minimum wage, businesses will forage the black market for labor, which is why illegal immigrants pick fruit for $5 an hour under the table. The only way that the minimum wage works without wrenching the market is if it is constantly being respected and altered to represent true variable that it is. Markets change–literally–every day, and when the minimum wage is not altered to represent its true value, money is forfeited in the market by all parties, which has majorly destabilizing macroeconomic effects. So, to my leftist friends, I posit you this: assemble a committee of economists that will meet once a month and alter the minimum wage to represent its true value in the US marketplace; please don’t crash the economy in your pursuit for justice, because that would be unjust.
Economic conservatism is predicated upon respecting the fact that animating a battle for justice and equality in the marketplace generally leads to damaging and paradoxical long-term results–such an idea has been totally lost by the modern American left. A President Sanders–or any other left-wing extremist–would destroy our nation’s economic foundation in his short-sighted pursuit for equality and justice.
James is one of TUC’s original writers and attends Penn State University. Follow him on Twitter @FamousJameis14