Minimum wage
From Free Talk Live
The minimum wage is a touchy political and social issue with many Americans. On the face it seems reasonable that a person gets a fair wage for a hard day's work. The question that most libertarians ask is, "Who is government to decide what 'fair pay' is." There is yet another economic argument against a minimum wage. A price floor, which is what a minimum wage is, creates unemployment.
Freedom of employment
The first problem with the minimum wage is the assumption that business will take advantage of ignorant people if given the chance. There is a problem with this assumption: a person should become wise to the fact that their labor has value and the government should not step in to enforce "decent" pay rates.
Employment in this country is strictly voluntary. There is no indentured servitude, or slavery in this country. We don't have debtor's prisons or work camps for the poor. If a person voluntarily [works for a low wage, then that is his or her choice as a free American. This is especially true if that person is desperate for employment due to a lack of education, job skills, or even a job shortage due to economic recession. If a person volunteers to work for any wage and a company or individual wants to employ the person for that wage, in absence of minimum wage restriction, that person will be able to earn money causing economic benefit for both the employer and employee. A minimum wage restricts this free trade of labor and imposes undue government regulation on both parties.
The economic argument
The capitalist system of labor in this country should naturally find an equilibrium price to labor. That means that in a given job position if there is a labor surplus then the price for that job will decrease causing less people to want to work in that situation. However if there is a labor shortage for a certain job then the price for that job, wages, will increase. Jobs requiring a low level of skill like custodial jobs bring less wages that the rare jobs that require an extremely high level of skill, like a corporate executives and computer programmers. This is a naturally occurring phenomenon.
If a person with little to no education needs employment they generally fill low paying jobs in the agriculture or service industry.
To explain this a little more deeply one must understand the effect of price floors and price ceilings. A price ceiling is a maximum legal price that can be charged for a product. When a business can only sell for a low price then they will stop supplying that product. Examples include long gas lines or shortage when the price is capped. The inverse, a price floor, is also true. When the government decrees a minimum wage (think price) for labor, there are businesses that do not want to pay that artificially high price. The effect is a shortage of demand or an excess supply of labor. In other words there is an increase in unemployment, leaving business and eager workers unfulfilled.
