Why would anyone want to work in an economy where hard work has great value and a minimum wage increase is the reward? The kind of hard work politicians and activists are using to try to force a minimum wage increase is not effort directed at something the economy values.
Paying too much for hard work that requires no skills should not be one of our goals. Hard work is an excuse until we find a better way to get a job done and it usually deserves low pay.
Why hard work should mean low pay.
Pay isn’t a reward. Pay is what the market decides your contribution to the economy is worth. If your hard work comes with low pay that doesn’t mean what you are doing should be worth more. It means your skills have little value or you should be doing something else.
If workers couldn’t vote, their hard work wouldn’t be worth much to politicians, either. Labor Secretary Tom Perez talked about attending a rally for a minimum wage increase on a Friday,1 a workday when most of us are at our jobs instead of carrying signs in the streets lamenting the meager paychecks coming from our hard work. Since Mr. Perez is our Labor Secretary we should expect him to understand that the market does “reward hard work with a fair wage.”2 What the labor market doesn’t do is pay too much for work that requires few skills. If hard work has little value or can be done by almost anyone, a fair wage won’t be much of an income. So why is the government telling Americans that working hard and being rewarded with a minimum wage increase is their ticket to walking out of poverty?
Hard work + minimum wage increase = an end to poverty? Not exactly.
Joe Biden said the most insightful thing to come out of the White House in years when he made this remark last weekend:
But if we raise the minimum wage to $10.10 an hour, that same worker will be making $20,200 a year—and with existing tax credits would earn enough to bring that family or a family of four out of poverty.3
Biden hit the nail on the head as far as the government is concerned. A minimum wage increase won’t bring anyone out of poverty without help from taxpayers, whether it comes from tax credits or welfare (see: Guaranteed Hourly Wage Scam Burns Working Families).
Salvation from poverty looks pretty shaky for the half million workers who would find the low pay for their hard work dropping to $0.00 per hour after a minimum wage increase.4 For those who keep their jobs, only 19% of the earnings from raising the minimum wage will go to families in poverty.5
Given the Obama administration’s emphasis on STEM training, rewarding teachers, education funding, and computer literacy, it is ironic that there is such a strong campaign to reward jobs that the free market has already deemed to be of low value.
The president was on to something back in 2011 when he said that our country had gone soft. Sad to say he was right, though he has done everything imaginable to blunt the competitive edge he was criticizing and the Americans he should have been pointing his finger at probably voted for him.
Let’s face it. America needs a kick in the backside, but a minimum wage increase that rewards hard work instead of economic value is not going to do it.