By: Colin Combs
Last Tuesday, Republican Gov. Rick Snyder signed a new bill into law that will increase the state’s hourly minimum wage from its current $7.40 until it reaches to $9.25 in 2018. The House voted 76-34 and the Senate voted 24-12, so it passed with an overwhelming majority support. It is truly disheartening to see the popularity of minimum wage legislation today, not only as a violation of our sacred rights of property and contract, but that among all the economic fallacies and manipulations we see today, this is frankly one of the more obvious ones and perhaps easiest to see through. Economists have been crying out against it for over a hundred years, and yet it continues on. All the way back in 1850, Frederic Bastiat listed it as one of the names of “legal plunder” in his classic work The Law, but still it persists.
Those who support minimum wage laws rarely do so out of malice. Rather, they are under the impression that by the government making it illegal for people to accept job offers for a wage lower than what the government will allow you to accept, that they are somehow guaranteeing people a higher wage, one that the state has deemed high enough for you to be able to live on. The only “negative” consequence of it, in the eyes of the left, is that the big fat cat employers can now only exploit their proletariat workers to a lesser degree. When the average voter hears minimum wage, the first thing that pops into their mind is indeed what they suppose is a more fair treatment for the poorest among us.
But the economist tells us a different story. The economist sees that when the government forbids people by threat of force from accepting job offers, they are, in fact, keeping people from getting jobs. Minimum wage laws do not guarantee that someone will be employed at higher wages, but only that if they are going to be employed, it will be at a rate at or higher than whatever wage the state arbitrarily picks. It is, in essence, a law forcing people to raise the price of their labor against their will.
And what are the consequences of a price increase according to basic economics? More people will be willing to supply this product and less people will be willing to buy. In other words, we will have more people looking for employment and less people willing to provide it. Only forced unemployment can come as a result of the state forces people to reject employment opportunities. This kind of conclusion is so obvious it is virtually a tautology, yet so many people do not seem to understand this.
Our sympathies go out to the poor of Michigan who will struggle with finding work in the years to come.