Wednesday, May 4, 2011

Minimum Wage Creates Unemployment

Early into his presidency, Obama liked to talk a lot about how he wanted the minimum wage to be raised and to index it to inflation thereafter. He said that those who get paid minimum wage are not making enough to live on, and that we need to raise minimum wage in order to raise the standard of living of those earning the lowest incomes. But is Obama looking out for the little guy, or is he just playing politics as usual?

Let me put on my conspiracy theory hat for a little bit here. As we all should know, minimum wage increases unemployment. That is because companies do not care what the minimum wage is; all they care about is how much an employee is worth. If that worth is below the minimum wage, the potential employee is illegal to hire. A company is not in business to lose money, which is what the company would need to do in order to hire the employee. It should be clear, then, that minimum wage does not raise average wage, but merely puts out of employment all those who are not worth minimum wage. But that is not the conspiracy theory portion, that is just good economics. Now what follows is based on no evidence, but is merely an examination of the full implications. My conclusion from those implications is the conspiracy theory. Now, since raising the minimum wage will raise unemployment, all those who will necessarily lose their job as a result will now need money coming from somewhere. The main source of relief is government aid: welfare. Now which party typically defends welfare and tries to expand its rolls? The Democratic Party. So those who are receiving the benefits are more likely to vote for those who will keep the money coming in. Raising the minimum wage, then, is a way to secure more votes for Democrats. It is not about relieving the economy, as I have already shown in my post entitled Unemployment Lingers On. Obama must know this, he is not a dummy. He is a politician first and foremost, and this is what they do. Politicians do not care about us, they care about getting votes, and this would be a great scheme to secure votes for his party.

The minimum wage sounds great to most people. After all, how can we defend lowering the minimum wage? How inhumane of us! However, popular opinion has never been something that can be reasoned with, despite all the facts that go against that opinion. The only answer is mature discussion and education. That is the only answer to pandering, and it will take a lot of it to defeat something that has such an appeal to emotion.


  1. Buying votes with other peoples money. We voters have been and are such saps to keep sending the same kind of perverted minds to Washington.

  2. I always wonder what it was that in the 1800s by and far prevented this kind of thing. I know it sounds radical, but maybe it was expanding the electorate? It's a totally baseless claim, but what else really changed that could have such a tremendous effect on our government?