The Minimum Wage is Inequitable

There is a lot of talk these days about income inequality and the need for a living wage. Progressives claim the cause for themselves, but it is actually damned hard to find someone who wants an inequitable distribution of income and for people to have to suffer with a less-than-living wage. Many concerned with the matter, on both the left and the right, have called for an increase in the minimum wage as a way to remedy these problems. This is a mistake. it will provide no such remedy and is inequitable as well.

An increase in the minimum wage may help some. The beneficiaries will be those who are worth at least that much to their employers but for some reason have accepted a lower wage. Those who are not worth that much to their employer will be fired. A few employers may be so civic minded that they will keep people on the payroll thought they are not worth the higher minimum wage. The loss they incur will prevent expansions that might have created jobs for others. Ultimately, the loss will drive the civic minded employer out of business, and then all his or her employees will lose their jobs.

The other problem with the minimum wage is that it places the burden of providing a living wage unevenly. It falls entirely on those in businesses who hire people at the low end of the income distribution. To be sure, these include the Walmarts and other major corporations who might be able to afford it. But this group of employers also includes the baker of main street, the fast food cart near the city park, and the cobbler in the lane. These people cannot afford it. Faced with an increase in the minimum wage, they will have to do with less, expand less than the might, or simply close up shop. No matter how much people want to help those at the low end of the income distribution, this is not a pretty picture.

There is a more honest and equitable way to help these poor people at the low end of the wage scale. The government should shoulder the cost of providing people with a living wage itself. It could offer wage subsidies, for instance, or simply enhance the incomes of those at the low end of the wage distribution. I doubt this government or any other wants to do this, because it would involve telling the taxpayer that he and she has to bear this burden. It is much easier to express a concern, shift the burden unevenly onto a few employers, and take credit for helping the poor. It is sad, but it is what this government has done, as have so many others in the past.

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