To Revive US Economy, Remove Minimum Wage in American Poverty Centers

The very thought of eliminating the Minimum Wage might seem like a horrid, medieval joke. Yet, did it ever occur to you that the whole job outsourcing argument was a sham? Why? Because if we treated our own areas of extreme poverty like we do India and China, we wouldn't need to see another American job move overseas again.

For is it not obvious that work is moved overseas because labor is cheaper? Further, does it not make sense to keep jobs in America if we have areas such as Detroit, at 50% unemployment, which are as impoverished or as needy of employment as various parts of Asia? But what about forcing the poor into poorly paying jobs, you ask? Well, with a revived economy, many more higher paying jobs would result, meaning entire ghetto areas could be transformed into oasis' of prosperity. Or do we assume jobs with modest pay are more of a dead-end than permanent welfare status? This article explores the option of breaking the Minimum Wage Embargo for restarting the US economy.

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I. Purpose of the Minimum Wage: "Economic Justice"

Minimum Wage laws are put into effect because there is claimed a threshold under which people cannot exist, or at least have a reasonable life. This threshold metes out "Economic Justice." While this is obviously true at some level, Minimum Wage laws are not set at the scientifically-gauged line where Economic Justice can occur. This is because Economic Justice, much like Living Wages, have no real-world metric, or even definition, being just an idea out of Marxist theorists. Consider how vaguely one site defines the term:

The Three Principles of Economic Justice: Like every system, economic justice involves input, output, and feedback for restoring harmony or balance between input and output. There are three essential and interdependent principles of Economic Justice: The Principle of Participation, The Principle of Distribution, and The Principle of Harmony. Like the legs of a three-legged stool, if any of these principles is weakened or missing, the system of economic justice will collapse.

First, none of the three phrases listed has an inevitable connection to fair economics, so why are they chosen? Second, while the "3-legged stool" analogy is dramatic, certainly real fair economics is not built in the shape of a stool. The key is the need for Economic Justice advocates to demand wealth redistribution, or socialism, to take place. One writer explains how Economic Justice, aka Social Justice, really comes into being:

Many speaking the language of social justice really mean "economic justice." Unlike traditional practitioners of social justice, whose occasional noble interests ranged from abolition to prison reform to child-labor laws to the inherent dignity of the human person, many modern practitioners seek wealth redistribution, "living wages," progressive income taxes, & an ever-widening net of federal government power; they are inclined to class interests rather than human rights. And by their estimate, achieving economic justice requires collectivism. They invoke social justice to try to resolve not traditional social differences as much as class/income differences.

Instead, what occurs is that non-market players, such as governments, set arbitrary wages for hourly labor based upon a purported "Living Wage." But do any politicians run on such ideas? In fact, Obama admits he is driven by such goals:

Barack Obama during a radio interview in 2001 said some rather troubling things. He posited that the civil rights movement, while successfully establishing social rights for all, did not pursue "economic justice" and "redistributive change." While said in the context of talking about the segregation movement, he was explicit in noting that the civil rights movement had not gone far enough in terms of providing equal rights for all. In his view racial integration was the first step towards equality in terms of providing racial equality, but true equality will only come with the economic equality of all, beyond the race issue.

So Minimum Wage laws ARE legislated Economic Justice, aka socialist redistributive justice, plain and simple. But sadly, instead of helping the most at need, they hurt the poor's ability to find work. But this does not have to happen.

II. Effects of the Minimum Wage on Economies

When Minimum Wage laws are placed into effect, invariably politicians announce passage in the name of the poor with strident and pompous speechifying about "economic fairness," etc. But do such wage laws actually create economic equity as their framer's claim? Sadly, not only do these laws fail, but their very intent of helping the poor is stymied by the real world! But why? First, these laws increase the costs of labor and so reduce the number of any low-skilled workers any business is able to hire. Second, this cuts into productivity and makes their products more expensive to create, therefore reducing profitability, making it even harder to hire more workers. Third, it keeps businesses from creating a more realistic hierarchy of pay, where more ambitious, skilful or productive workers can be paid more than their less able counterparts. Ultimately, these laws shrink the economy for all persons, regardless of pay-scale. But, take for example the case of a Detroit. There, in Motor City, wage deformation created by excessive union demands caused the goose laying the golden eggs--being the automakers--to kill the hen in search of more eggs. Further, the Minimum Wage now makes it impossible for the government to allow Detroit to use lower paid workers to entice manufacturers who are headed to China or India, to instead settle in an India-like part of America. And that is tragic! Or, as one economist puts it:

Several decades of studies find Minimum Wage laws reduce employment. Currently, a 10% increase in the Minimum Wage would decrease employment of low-skilled workers by 1-2%. Job losses for black U.S. teenagers have been found to be even greater. According to a 1978 article in American Economic Review, 90% of economists surveyed agreed that the Minimum Wage increases unemployment among low-skilled workers.

III. America v. China--Federalism Leads the Way in Detroit

Why has China's economy been growing at a double-digit pace for years on end? This is because costs are cheaper in China to produce goods, and therefore it attracts manufacturers from across the globe. Yet the goods produced are often of inferior quality and it is doubtless most American manufacturers would choose to stay if all other factors were equal, correct? So why not treat the worst economic areas of America--which are statistically perhaps as poorly off as China or India--as if they were part of the third world? And does it not make sense to get rid of the Minimum Wage for worst-economy cities as Detroit and sister Flint in which city leaders admit the unemployment rate is probably 50%? For example, would not at least some of the half unemployed be willing to work for $5 an hour instead of $8 an hour? Further, wouldn't those choosing this route be much better off in terms of mental help, preparedness for other employment opportunities? Moreover, might not such a change lead to a local renaissance where the entire economy would expand leading to countless more opportunities? And don't forget how extra taxes will help fill federal, state and city coffers. Better yet, regions may choose, state-by-state, whether to apply Minimum Wage laws, or not, based upon Federalism principles of state's-rights. For example, a Michigan could opt for a voluntary Minimum Wage, whereas the very liberal California might opt to raise its own rates. And persons could decide where they would like to live. But don't be surprised if an eventual Texas-styled economic revival hit Michigan after a few years of this, and also dumping excessive red tape regulations.

IV. Conclusion

Modern liberalism, aka socialism, has many nice-sounding ideas full of economic death. The Minimum Wage law is another of these. In fact, the US government under Bill Clinton admitted that such laws were counter productive. The Joint Economic Committee Report of May 2006 published an article titled: The Case Against a Higher Minimum Wage. It stated:

The voices clamoring for a Minimum Wage hike are getting ever louder. Proponents argue that the current wage level does not provide an adequate incentive for work. Also, they argue that an increase in the Minimum Wage will have only a very minor impact on jobs. These arguments are not grounded in fact. The impact of raising the Minimum Wage has been studied since its inception. All credible research has come to the same conclusion: raising the Minimum Wage hurts the poor. It takes away jobs, keeps people on welfare, and encourages high-school students to drop out. Policy makers should be clear on the consequence of higher minimum wages.

The fact is, we can save cities like Detroit and other areas ravaged by bad policies if we are creative and bold in our ideas. And with the fate of the free world swinging in the balance, and no time to lose--what are we waiting for?!!