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6.6.05

Nothing happens in a vacuum...

I had a discussion with a vibrant and emotional leftist the other night, and I came away with one of two main thoughts.

One of his main themes was that corporate executives are crushing the American economy by taking such large salaries and bonuses from the company till.

I must say that I agree with the notion that selfish corporate executives are damaging the macroeconomy of this country with their actions.

I was told that the solution to the problems faced by the workers who find themselves closer to the bottom of the economic totem pole than the top was an immediate minimum wage hike. Not the sort of hike proposed by Ted Kennedy or Rick Santorum, which would raise the minimum wage a dollar or two. No, this person thinks the minimum wage should be raised to $15/hour.

I think there are several reasons why the minimum wage actually hurts the lower class people instead of helping them.

First, higher minimum wage laws encourage employers to hire workers who work "under the table" where wage laws don't apply. Many of these "under the table" workers end up being illegal aliens, and I see a direct correlation between the minimum wage and the rate of illegals coming into the country. More illegals mean more hospitals which go out of business, and greater strains on public education, services the lower class workers depend on very heavily.

Second, I tried to make the point that a raise in the minimum wage would lead directly to a corresponding hike in prices. After all, if the cost of producing a product doubles or triples, the cost must go up, according to the most basic economic theory.

Finally, it attempted to explain that some work just isn't really worth $10 or $15 per hour, though he didn't want to hear that, as do most on the left. In reality, the cashiers at Target or the hamburger flippers at Wendy's are supposed to be entry-level jobs designed for young individuals who are just starting out in the work world. Generally, these people are not indebted to car loans, mortgages, children, or other bills. These types of jobs are not meant for parents of children who are trying to support a family. (Though, you can read here how a two-parent family where both work full-time earning minimum wage would not be considered to be living in poverty by the U.S. Dept. of Labor)

Ultimately, the problems of the lower class cannot be solved by government interference in the economy. Only the individuals can do what is necessary to raise themselves up. Employers and corporate executives continue to act in their own best interests, while employees do not. This is the sole reason why the rich get richer and the poor get poorer.

Capitalism only works when employees work to become more valuable entities and demand better wages from their employer. Just as the wealthy found ways to get around the imposition of the income tax via corporations, they will find ways to get around labor laws.

While the lower classes are holding their hands out waiting for someone to come along and tell them they are entitled to earn more than the value of the work they perform, they will continue to be the root of their own despair.

Only when individuals make a conscious choice to become more educated, more efficient, more skillful, and more valuable to employers will they actually become more economically stable. Until then, power hungry politicians will be happy to trade votes for some hollow promises based on economic theories that are completely unrealistic.