Minimum Wage Battles in Michigan

One of the seven principles of sound public policy is that we consider long-run effects and all people, not short-run effects and a few people. The latest push for an increase in the minimum wage could use more of a consideration of the long-term effects on all people.

The stated goal of proponents for a higher minimum wage is to help struggling families, according to Fight for 15, the union-sponsored group supporting fast food strikes around the country. In 2012, however, 55 percent of all minimum wage workers were between 16 and 24 years old, according to the Bureau of Labor Statistics. In other words, the majority of minimum wage workers are young people who are unlikely to be breadwinners for a family. 

Even with that in mind, raising the minimum wage is an ineffective way of trying to help people because the concept is fundamentally flawed. Every worker provides some level of value to their business — otherwise they wouldn't have a job. But not every worker is equally valuable to an employer. By prohibiting employers from offering job at wages less than a mandated and arbitrary rate, low-value work will often not be offered. This is despite the fact that many people would prefer that job for the below-rate compensation rather than settle for existing alternatives. 

As Mackinac Center for Public Policy Director of Labor Policy Vinnie Vernuccio has said, hiking minimum wages doesn't guarantee more pay for workers. It guarantees fewer jobs.

If the point of the minimum wage is to increase average wages, it hasn't accomplished its goals. Inflation-adjusted median weekly earnings are down 3 percent since the recent federal increase in the minimum wage, according to the Bureau of Labor Statistics, and this is even after prohibiting wages below a level. With fewer jobs after the recession and lower average wage rates, you have to wonder whether the minimum wage is an effective tool for accomplishing its goals.

This is an immense increase in the number of people working at low wages. While this doesn't necessarily show that raising minimum wages hurts its intended beneficiaries, increasing the minimum wage does not increase wages at the bottom.

The most effective way to raise the standard is to promote economic growth for everyone.