united-states-capitol-Minimum Wage Legislation Can Bring Maximum Misery

For a whole lot of people, the often-heard political promise to “raise the minimum wage” sounds wonderful. The first impression for many people who are earning a lower amount is that they’ll quickly be able to afford more of something that they want or that’s missing in their lives. When I was a teenager cleaning used cars in the 1960’s at Lincoln-Mercury car dealership in Niagara Falls the federal minimum wage was $1.00 per hour. I thought that my boss was a hero because I got a raise to $1.50. Today, it’s fascinating to calculate that a $.50 cent increase was a 50% increase! Maybe I could buy one of those old cars. When I got the job my only practical experience was with buckets, water, rags and sponges. The real job benefit for me was gaining experience in the world of work and getting to look at how a business operates. The only job security came from showing up on time each day and leaving them with clean, shiny cars on the front line of the used car lot. It was never really meant to be a long-term thing.

The Washington DC Beltway

Right now inside the Washington DC beltway some people are saying that with a federal minimum wage of $15 per hour millions of people will get a raise, many of them women and minorities. You are probably thinking rather smartly that to get the raise, those people have to keep their jobs. As a person who has owned several small businesses, I know that the calculators on smart phones all over the country will be used to determine how many employees can be afforded at that pay scale at each business. The Congressional Budget office has issued a report that estimates 1.4 million jobs would disappear. What they can’t tell us is how many people would be passed over in the first place because they’d be too expensive to even interview for some jobs.

Minimum Wage Jobs

I still think that minimum wage jobs are best for teens and young adults who are seeking to gain job experience that can lead to higher paying jobs and upward mobility. Walking into one of those jobs you have to leave your expectations for rent paying or car buying money at the door. Like a professional Trojan Horse, you simply want to leverage your presence inside to better opportunities in that enterprise or elsewhere.

Great Northward Migration

The history of federal government involvement in legislating wage levels is interesting. Back in the 1930’s labor unions were pushing congress on behalf of their members who were afraid of competition for their jobs. A lot of that competition was from southern blacks migrating north in large numbers seeking jobs and relief from systemic segregation laws in a number of southern states. My father was one of those people.

John F. Kennedy

Congress upped the minimum wage from time to time over the decades. Even the beloved John F. Kennedy advocated minimum wage increases when he was a senator to protect businesses stability and workers in New England. His point of view was that a large influx of cheaper labor could depress the wage structure for the people who already had the jobs over a large area. That logic has endured the test of time.

So, when we hear elected officials in Washington hang their pleas for a higher minimum wage on the promise to make life better for women and minorities, you should have a look at the bigger picture. If you are a business owner, you already know the real story!

Nelson Davis
The Entrepreneur Explorer

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