Misguided Compassion: The Fight For $15 Minimum Wage

Misguided Compassion: The Fight For $15 Minimum Wage Image

While it may be true that many (perhaps most) of those who are involved in the “Fight for $15” hope to personally benefit from such a wage hike, there are also many others who support the cause out of sympathy and compassion. Accusing them of greed or laziness is therefore inaccurate and harmful to the debate.

Arguing with compassion is difficult, and it is incredibly hard to do so without looking like a greedy, selfish miser.
Unfortunately, unrealistic compassion is ineffective.   It either does nothing at all, or it ends up harming in one area while attempting to help in another.

Failing to confront this unrealistic compassion helps no one.  However unpleasant a dose of realism may be at first, it is a vital necessity if we are to truly help others in a way that is both charitable and effective.

What Would Happen if They Won?

Those who support raising the minimum wage generally only consider the immediate, short-term consequences. Their view of a $15 minimum wage is simple – workers who have previously earned less now have more to spend, and their families are able to live better.

But their error lies in not studying the less-obvious, long-term consequences.  So, what does happen if these workers win a mandatory $15 minimum wage?

Well, as we have already stated, these workers receive a larger paycheck.  This makes them happy.  However, that money does have to come from someone or something.  It could come from inflated prices.  To cover the cost of these higher wages, their boss could raise the prices of the products that company sells.  This means that while those workers earn more money every hour, the cost of living goes up as well — leaving their economic status virtually unchanged.

Even if their increased wages are more than enough to compensate for the inflated prices, others who didn’t get a raise find themselves hurting because of the increased prices of these products, which means that their once-adequate wage is now less-than sufficient.

Obviously, raising the prices of the products isn’t a good idea.  So where else could this money come from?
Well, the CEO might look at the numbers and decide that he can get by with less workers.  This way, he forces his employees to actually earn the extra money by doing extra work, and his costs (and the costs of the products) stay the same.  It’s a win-win situation, right?

Or… not.

The CEO and the employees who aren’t fired might be happy, but at least some workers will end up fired — or they won’t get hired in the first place. Their former coworkers may enjoy a better standard of living, but these workers now end up without any job whatsoever.

Obviously, this solution isn’t going to benefit everyone, either.

Oh, but what about those greedy CEO’s? After all, they earn so much more than their employees, letting those hungry masses do all the work while they live a life of luxury. They ought to share the wealth, right?

Okay, so let’s do a little math. We’ll use McDonalds as our example, since the “Fight for $15” seems to focus on those working at fast food places. The current federal minimum wage is $7.25/hour.  The CEO of McDonalds earns an approximate hourly wage of $9,247.  McDonalds employs 420,000 people.

With these numbers, we can calculate what would happen if the CEO were to completely forfeit his entire wage and divide it equally among these employees.

The result? They’d receive a raise of only $0.02/hour.  Obviously, a $15 minimum wage can’t be supported by simply removing or reducing the CEO’s wage.

What Should We Do Instead?

“You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation.”  -Henry Hazlitt, Economics in One Lesson

Rather than trying to force employers to offer a larger wage, our compassion ought to compel us to take different sorts of actions.  Perhaps you could teach minimum-wage earners new skills that make them more valuable employees.  Perhaps you can help them get a job elsewhere.  Perhaps you can find an innovative way for them to cut their cost of living.

I’m not going to pretend that it’s going to be easy. But raising the minimum wage is only going to add to the problem rather than helping you solve it.

About The Author: Hannah Callahan is a 21-year-old freelance writer who lives in Kansas with her husband and six-month-old daughter. Politics have been a life-long interest of hers, and her favorite authors include Frédéric Bastiat, Henry Hazlitt, and Ron Paul. She blogs at Callahannah.com when she isn’t cooking or eating chocolate.