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RAISING THE MINIMUM WAGE IS BAD FOR THE POOR, BUSINESS & LIBERTY

 

 

By Dr. Patrick Jonston

October 31, 2006

NewsWithViews.com

Raising the minimum wage will be on the Ohio ballot as Issue 2 on Nov. 7. Its defenders complain about poverty and job loss, but prescribe a remedy that worsens poverty and job loss! If you do the math, you’ll see that raising the minimum wage is not good for the poor or for businesses.

As a small business owner I have come to see this as self-evident: when a business has allocated a certain amount of money for overhead and the overhead costs increase, it can be a devastating blow to the business, especially if the increase in overhead costs does not increase productivity and profitability.

It’s not just the raising of the minimum wage that increases the payroll costs; it’s raising the wage of all of the other employees as well. If the minimum wage is raised from $5.15 to $6.85 an hour, as Issue 2 proposes, then the employee who earned $6.85 an hour will want more than minimum wage because he has more experience and is more valuable to the company than the minimum wage employees. And when the employee making $6.85 an hour gets his raise, then the employee on the pay scale above him will want one too. In short, when the minimum wage increases, payroll costs increase dramatically.

Issue 2 also increases business overhead costs by way of burdensome record-keeping requirements that the amendment proposes in the fine print. This added expense can make the existence between profitability and bankruptcy for a small business.

The increase in payroll costs without an increase in profit to provide for it can be an overwhelming burden on the business owner. Business owners must do one of one of three things to compensate:

1. take a cut in his own pay,
2. terminate the employment of some employees,
3. limit the hours of some employees so that their take-home pay is the same as when their hourly wage was lower.

Inevitably, some poor employees lose their jobs or have their hours cut, which is a disincentive to the poor working at all since welfare checks can be greater than their paychecks. Moreover, businesses become less profitable, which is a disincentive to entrepreneurialship. Make no mistake: a state-mandated increase in the minimum wage is bad for the poor and bad for business!

The Bible speaks to this issue of wages. John the Baptist commanded workers to “be content with your wages.” Coveting wealth that God hasn’t given you is a transgression of the tenth commandment, and according to Colossians, covetousness is idolatry. According to several passages in the Proverbs, there is a biblical way to acquire wealth: fearing God, acquiring knowledge, diligent work, and giving to the poor and to God’s work.

In Matthew 20:1-15, Jesus tells the parable of a business owner who hires some people in the morning to work for him that day for a given sum. Around midday, he finds more men standing around idle and tells them, “Go into the vineyard and whatsoever is right I will give you.” Toward evening, he found some others standing around with nothing to do and he said to them, “Go ye also into the vineyard and whatsoever is right, that shall ye receive.” At the end of the day, he paid each of them the same amount of money. Those that worked through the heat of the day complained that they received the same sum as those who only worked a portion of the day. The business owner replies: “Friend, I do thee no wrong… Take (your money) and go thy way; I will give unto this last (worker) even as unto thee. Is it not lawful for me to do what I will with mine own?” (emphasis mine).

That was a rhetorical question then, but unfortunately has become a question with which we must grapple in our socialist society. Is it not lawful for the business owner to do what he wants with his own money? The Bible says in Ecclesiastes that wealth is a gift from God to the person. It is lawful for a business owner to do what he wants with his business and his money, and it is not the place of bureaucrats to usurp a business owner’s God-given rights! God ordains governments to punish crime in accordance with His law and protect citizens from invaders – not to manage the economy or to establish new standards of morality and justice. God is the author of right and wrong, of justice and injustice, and those who establish counterfeit standards are imposters. Even a unanimous democratic consensus is subject to the rules of God Almighty. God’s Word sets the standards for buying and selling, for hiring and for employment, which maximizes our freedom and opportunity. God’s ways are best! State-mandated increases in the minimum wage is not only bad for the poor and for business, it’s bad for God-given liberties as well.

The free market can handle the problems of unemployment and poverty much better than bureaucratic interference. I’m not saying that $5 an hour is a fair wage, but it’s not up to the government to decide. That should be between the employer and the employee. Business owners should be free to pay people for what they think they are worth. It’s their business, it’s their money, and the employees can pursue employment elsewhere if they don’t like it or join a competitor that treats employees better. The greater profitability of businesses whose employees are treated well is sufficient to encourage fair and competitive wages. Free men under the constraints of conscience can provide charitably for the poor much better and with much less waste than government bureaucrats.

One of the primary causes of Ohio’s business stagnation and poverty is government control. We see unhealthy government interference in high taxation, in welfare distributions, in government schools that aim to improve self-esteem instead of maximizing intellectual proficiency and preparing students for the workforce, and in the mountains of regulations that the government imposes upon businesses. Therefore, increasing government control is not going to fix the problem. Get the bureaucrats out of the equation and let the free market reward diligence and ingenuity and discriminate against laziness and poor service. Let business owners be free to pay people what they’re worth and let the poor be free to work for what they’re worth. Freedom is more important than wealth. Wean the poor off government hand-outs and let businesses operate without all of the expense of government regulations, and the poor and business owners will do better in the long run.

A state-mandated increase in the minimum wage is not a remedy for Ohio’s poverty, it just prescribes more of the malady. It benefits bureaucrats and attorneys, not businesses and not the poor. It violates the God-given right to property.

© 2006 Patrick Johnston - All Rights Reserved

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Patrick Johnston and his wife Elizabeth reside in Zanesville, Ohio, with their six young home-schooled children. Patrick is a family practice physician and founder of the Association of Pro-life Physicians, which is dedicated to restoring a remnant of physicians in our communities who are convinced that life begins at conception and who will not commit nor refer for abortions (ProLifePhysicians.org).

He founded the Alliance to Reform Education Funding to fight public school levies and promote Christian home-schooling (StopSchoolLevies.org). He founded the Coalition for Justice for All to pursue justice for Ohio's pre-born and to provide photo-documentary evidence on-line at StopColumbusKilling.net of the abortionists and their accomplices at the abortion clinics of Columbus, Ohio. Dr. Johnston is committed to revival in the church, and the restoration of Biblical law and constitutional government in America.

E-mail: docjohnston@adelphia.net

 


 

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If you do the math, you’ll see that raising the minimum wage is not good for the poor or for businesses.