To raise or not to raise?

December 16, 2013

The debate over the dilemma with the minimum wage is again at the forefront of our newspaper stories. On one side you have the claim that minimum wage is an entry level wage. On the other side you have minimum wage as a living wage.

At the time of enactment the framers of the Fair Labor Standards Act of 1938 may have envisioned the minimum wage to be a living wage. Over time that vision has eroded because of the very nature of a minimum wage. Minimum wage is an arbitrary wage set by government. The arbitrary minimum wage is being used today for those entry level jobs that require minimal education (high school), no technical skills other than those learned on the job, and a no experience requirement. What is required for the entry level job is one’s ability to learn, show initiative, and follow instructions.

The minimum wage is not a fair wage. To be a fair wage the wage must be established by the laws of the free market. In a free market wages are set by supply and demand. As the supply of workers increases the wages go down. As the demand for workers increase the wages increase. An arbitrary minimum wage interferes with the free market principles of supply and demand.

Minimum wage is not a lifetime or a life’s result wage. To be a lifetime or life results wage an individual’s education, technical skills, experience, and one’s ability to apply these to the working environment must be taken into consideration. If we follow the concept that minimum wage is a living wage, these would become irrelevant to the establishment of a wage because the minimum wage already compensates for these items.

The real problem is that a living wage is different for each individual and each family. A living wage is determined by how the individual or the family manages the income that they receive. For many a living wage is the minimum wage at any level. For others because of their inability to manage what they receive, no amount can be considered a living wage. A living wage is a subjective amount that can only be determined by the individual and not the government.

A simple look at the supply, price, and demand curves of economics will inform you that as prices (wages) increase demand decreases. To put it in a different light, as the minimum wage increases the number of jobs decreases. Study after study has proven that with every increase in the minimum wage there has been an offsetting decrease in the number of available jobs. We must face economic reality with the minimum wage; we lose jobs as it increases.

Ray Shamlin

Rocky Mount