Later this month one more liberal landmine is set blow another hole in our already frail economy. In 2007, shortly after the Democratic takeover of Congress, the minimum wage was raised. This act was praised by the media and their friends on the left as help for the poor. We were barraged for years with images of unfortunate people who could not earn a ‘living wage’ flipping burgers and mopping floors. The left claimed these people needed help and that everyone working full time deserved to earn enough to live on. So in charged the Cavalry, riding Democrat donkeys and Republican RINOs, defending the rights of the worker from the evil capitalists enslaving them. No longer would these people be taken advantage of, the liberals would see to that and Bush would sign the bill. To ensure future prosperity for these disadvantaged souls, Washington legislated regular automatic increases. One of these is set to go off on July 24.

The usual argument in favor of a minimum wage is protection of the lower classes. It is claimed business owners have so much power that unless the government intercedes people will be forced into sweat-shops, making subsistence wages while languishing in horrific working conditions. These claims usually mask the results of intrusive legislation, while hiding the lesser known motives of those clamoring for the increases. For example, some unions set the pay scales in their negotiated contracts as multiples of the federal minimum wage. If Congress raises this number then all those covered by these contracts get an automatic pay raise—no strikes, no picketing needed, let Congress do it for you. Another group with hidden motives is Congress itself. Every worker pays a flat percentage of their income in federal taxes (SSI, etc) whether they make enough to pay income taxes or not. The employer is also forced to pay a percentage of the employee’s salary in matching taxes. As a flat percentage of wages, when you increase the wages you increase these taxes proportionally. The employee is oblivious to this because his net pay goes up. However, the business owner has his portion increased and ultimately paid the extra amount taken from the employee. Seldom is Congress able to raise taxes with public support.

It is often forgotten that labor is a commodity—just like anything bought or sold. When prices go up for a product, demand for the product goes down. We see this when the price of gas goes up. People find ways to use less gas. They don’t do this to save the planet, or reduce dependency on foreign oil. They are motivated by basic economics—deciding on the best way to use their limited resource (income). Just like the average family balancing their needs, when the cost of doing business goes up the owner must reduce his profits or learn to economize.

The Robin Hood wannabes in Congress imagine that very penny increase to wages is a penny decrease in evil profits for the wicked business man. People do not go into business to provide jobs or to increase the GDP. They go into business to make money. When costs go up a business owner wanting to expand may decide to forgo hiring new personnel due to the higher costs. To do this he may shuffle his current staff or change their job requirements. If the owner is in a situation where he has no choice but to hire he may hold out for someone experienced instead of hiring one in need of training. Those suffering from an increase in the minimum wage are minorities, the uneducated and inexperienced—the same people liberals claim to champion.

Another problem with government intervention in wages is the loss of liberty. Seeking employment is an attempt to sell one’s time and skills. The highly skilled and educated are more valuable because their training empowers them to produce more in an hour than a less trained person. As a result they receive higher wages. Another person with no skills or training must take that into account when negotiating pay. Paying a certain wage for a set period of time is an exchange of value. If the value the employer receives matches up to the amount one is willing to take then a bargain is struck. When government sets a minimum wage, opportunities for the unskilled are reduced. If my time is not worth the artificial minimum, then the government has priced me out of the job market and stolen my ability to negotiate and my right to enact a private contract. If I am willing to sell the hours of my day for $2 each and an employer is willing to purchase them for that amount, what business is it of Congress or anyone else? The minimum wage reduces the freedoms of the average American.