Minimum Wage, Relief, and Morality

If you do not like reading about economics or you believe that the minimum wage is a necessity for our economic system then stop reading.  This posting will only make you angry or frustrated at best.  For those who can handle some common sense then please read on.

Henry Hazlitt wrote a book that was first published back in 1946 called Economics in One Lesson.  In Chapter XIX he talks about minimum wage law and its effects on things like unemployment, relief (what you and I recognize today as welfare and other federal/state aid).  I will do my best to summarize what he said so that you are not reading this all day long.

I will try to do Mr. Hazlitt justice in how I present his information.

Think of minimum wage as a minimum price that a product can be sold for to the distributor.  The product may not be worth the price that they are required to pay for the product.  When they pass on the cost to the consumer, you and I, then the demand for that product will go down (depending on the product or commodity).   This will do at least two things:

1. drive consumers to another product or service

2. since the demand decreased the profit decreases which eventually could lead to job loss at the manufacturer

So what happens if there is not a minimum wage?

1. workers can still pick whatever job they desire that will provide the income they need.  If the job does not provide then people will not apply.

2. the competition for jobs would increase (this will be explained below) since the labor force would significantly expand

Okay, so how do I justify point 2 above?

Let’s say minimum wage is set at $8.00 an hour, which is $320 for a forty-hour work week.  Now say that unemployment will give a person $250 dollars for someone who is classified as “unemployed” per their state’s guidelines.  This equates to $6.25 an hour.  So if a person can find employment or offer services at $7 an hour then they cannot do their service or fill that job.  They are denied $280 a week so that our tax dollars can give them $250 a week.  In Hazlitt’s own words, “we have deprived the man of the independence and self-respect that come from self-support, even at a low level, and from performing wanted work, at the same time as we have lowered what the man could have received by his own efforts.”  In other words, he cannot earn more than the relief provided, even though he is capable of earning more.

Now things really get itchy if the relief or unemployment provided is equal to the minimum wage.  Relief = $320.  Let’s say an unemployed person finds a job that will pay him $340 a week.  So going from being idle with relief providing $320 a week, to working 40 hours and only getting another $20 for those forty hours is not very motivating. ($340 earned minus $320 gov’t would supply if not working = $20)

So I think the point has been made that minimum wage laws do not help our economy, especially when coupled with relief provided by the government.

Now for the morality piece, I will leave you with a quote from C.S. Lewis out of his book Mere Christianity.

“I do not mean for a moment that we ought not to think, and think hard, about improvements in our social and economic system.  What I do mean is that all that thinking will be mere moonshine unless we realize that nothing but the courage and unselfishness of individuals is ever going to make any system work properly.  It is easy enough to remove the particular kinds of graft or bullying that go on under the present system: but as long as men are twisters or bullies they will find some new way of carrying on the old game under the new system.  You cannot make men good by law: and without good men you cannot have a good society.”

But the system can be changed and should be changed to allow for men to earn their respect instead of it being taken from them and turned into a handout, whether via the relief or the minimum wage.

I will be surprised if I get any comments since this is so long.
Keith

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4 thoughts on “Minimum Wage, Relief, and Morality

  1. JewelFern says:

    Am I misunderstanding you? You’re saying you’re against having a minimum wage? Isn’t the point of a minimum wage to keep workers from being exploited? Isn’t it in the best interests of everyone to have this minimum wage so that people are able to earn somewhat of a living? If they are earning below the minimum wage and can’t pay their bills, what is the motivation to work? It would feel useless to work for “free”. For what? For pride? To say “job well done”? There must be a minimum so that people aren’t taken advantage of and so that people can at least halfway take care of themselves. Would you agree?

    • Daddy Moose says:

      Yes, I do not agree with a minimum wage law. I do agree that there is power that people have which come in the form of unions. I do not like unions at the present moment, i.e. the teacher’s union ($500 to be a member!) but they do have a purpose under certain systems. My main point is that if you are going to have a minimum wage then do not offer unemployment checks.

      Do I want families going hungry? No.

      Do I think that unemployment relief yields lazy men? Yes.

      Do I believe that those men could find some sort of service or work to make some kind of money? Yes.

      Do I believe that having a minimum wage hurts their opportunity to find such work? Yes, based on the reasons presented in the main blog post.

      Whose responsibility is it to ensure that they can pay their bills? The government (our tax dollars)? Non-profit organizations? It can be their own responsibility, that just does not make sense because it is not their fault. Hogwash. It goes back to the last paragraph that C.S. Lewis wrote. The good that men can do is what has to be the saving grace of us all. When you see those “good” men disappearing then the protections that you talk about disappear with it. I just do not believe that it is the government’s responsibility to “protect” us from manipulative companies. I favor Karl Marx in this case, power to the people when they band together to create the working environment they deserve as a human.

      Your thoughts…

  2. JewelFern says:

    I agree; the government does have their hands in too much. They have too much power right now and it worries me. I don’t trust our government to “take care of us.” That’s not what I want. I can take care of myself…now.

    But there was a time that I needed help. And thanks to the welfare system, I was able to feed myself and my child and finish my college degree in order to better support myself. This system works when it is not abused or taken advantage of.

    Some men/women are lazy by their own decisions. I’m not sure “handouts” make them lazy; I think they just naturally look for the easy way out. But you can’t punish everyone who is having a hard time due to some who choose to abuse the system. The system was implemented to be used as a means to an end…a way to get back on your own feet. Do I think it needs to be revamped? Certainly. There should be a limited number of time that one may be on the system. People should have to work a 40 hour work week or go to school for an equivalent amount of time…which actually was in place when I needed the system, but I’m not sure how much it is enforced today.

    No, people shouldn’t be allowed to starve and yes, people should be responsible for themselves. But I’m unsure of how to fix things to where people actually do see that their own lives are their own responsibility…that they are not “owed” anything just because they breathe and choose to reproduce. You have to change the mindset somehow and that leaves me clueless. Does this mean the government should just say: “That’s enough. No more. The system is used up. Figure it out yourself.”? I fear we’d have a lot more crime on our hands, a lot of rebellion, and a lot of violence. I also fear that taking away these “perks” is the only way to motivate these people to get off their butts and do something for themselves…the ones that are able to anyway.

    Which I guess is what you’re saying: Take away the benefits of a controlling government and it’s people might actually become motivated to act for themselves. Is this what you’re saying?

    • Daddy Moose says:

      Yes, I am saying that it is not the government’s responsibility to take care of people in those situations. It is the community’s. Meaning, the relationships that you have with your neighbors, family, friends, church, non-profit organizations, etc… Imagine what would happen if we were not taxed so heavily and people ended up with a couple of hundred dollars more a month across the board.

      It is more than just that. Financially our nation is ignorant as a whole as to what a healthy lifestyle looks like. Credit has ruined our character. Patience, self-control, and contentment are things of the past for most families. We indulge ourselves like there is no tomorrow. So it is not just the government’s taxing of American’s that is hurting us but it is also our culture. But we have to start somewhere and I believe that if you give that power back to the people then they will see for themselves what they are capable of and be forced to change or fall by the wayside.

      If you did not have the government to help you out when you went through your bit (or even Heather and I with having Constance) then what would have happened? For us we would not have moved from Virginia. I would have stayed with the job I had that was covering our pregnancy. But because the government had a program to help us out we used it to help us get back closer to family. If we had stayed then who knows what the future would have looked like. Just because the government was there to help out doesn’t mean that it was your only option. And if the government wasn’t taxing us like they are to fund the programs that helped you out then you may have been able to get a scholarship or find some kind of philanthropic organization to hook you up. When there is more money to move freely in the system then people will find a way to support those in need.

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