The real minimum wage is $0.

Apparently anyone who opposes the minimum wage is an evil horrible person deserving of horrible things. That would be me then. It doesn’t bother me much, I’ve been called far worse. In my view, anyone who supports a minimum wage, any minimum wage, doesn’t understand free market economics. Setting a minimum wage is government interference in an economy which is at best crony capitalism.

At the age of 18, just out of school and not desiring to go to university, I had no skills, nothing to offer a future employer, and no options. There was a 5 star restaurant near my home that also had a smart bar. I figured that becoming a bartender, a good bartender, would be a valuable skill. Everyone likes a drink.

But I had no skills as a bartender. I’d done a bartending course which even I understood was useless. I didn’t even know how to pull a beer. But there was my local cricket club that had a very small bar. Maybe 10 club members at most sitting around it after a game. I volunteered at that bar. Pulled beers for a few weeks. Got good at it. Then I donned my best clothes and hustled my way over to that restaurant. Introduced myself and said that I wanted to learn how to tend bar from the best, (have to suck up a little bit).

Then I volunteered my services to them for free. I said that I was willing to work in their busy establishment, (they probably had 30 staff on the floor at any one time), for free for two weeks. If at the end of that time they wanted to hire me they could. If they didn’t, I would have got some experience and I could try again someplace else.

They gave me a shot and two days later offered me a full-time role.

That is the real minimum wage. And that is how the free market economy works.

Today that restaurant would not be able to accept that same offer. It would be illegal for them to do so. They would risk severe prosecution. So where does that leave young people who are now in the same position I was in 25 years ago?

There are many memes on this topic going around the internet. A typical one will be something like:

The federal poverty line for a family of three is $19,790 per year

A full time minimum wage earner earns $15,000 per year.

You are a bad person for this argghghghghggh.

The fact is that a person working a low wage is either low-skilled, entry level labor, or both. If they wish to earn more then they can simply up-skill. If they don’t want to do this then that is their choice but they certainly aren’t owed anything for that. At least not in a free-market economy.

But particularly not for entry level jobs. These jobs are crucial for everybody in their life. At some point we are all entry level. My story that I shared is in no way unique. But setting a minimum wage denies people this opportunity as well as denying the ability of businesses and potential employees to negotiate with each other. Ironically the first jobs that will disappear will be the very ones the minimum wage is apparently designed to protect. You don’t think so? You think those lowly jobs will always be around?

One of the first order of businesses is to innovate and improve. If the minimum wage puts a job in the unprofitable category then a business must find a way to make that position profitable again. It does this either by rising prices or by finding more cost efficient ways to solve the problem. Witness McDonalds now using teller machines to order your burger instead of people.

Business do not exist to give people jobs. They exist to find and satisfy a customer. They must also be profitable so they can survive. The minimum wage inhibits these vital functions. Agile businesses will find ways around it and entry-level people will inevitably suffer.

One thought on “The real minimum wage is $0.

  1. Rossini

    Any “young inexperienced” unemployed person using these automated services have themselves too blame for being unemployed!

    Like

  2. Craig

    Then there are the awards for each industry dictating pay, hours, when to have breaks… so complicated it’s not unusual for us to ring them with a question and get different answers depending who we speak too. Also there are times we employ our workers for less hours than both ourselves and them would like because they have moved into ‘overtime ‘

    Like

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