Based on a minimum wage debate I participated in recently at Northwood University, here are ten reasons that I support market-determined wages over government-mandated minimum wages.
1. Government-mandated minimum wages are always arbitrary and almost never based on any sound economic/cost-benefit analysis. Why $10.10 an hour (Obama said “ten-ten is easy to remember”) and not $9.10 or $11.10 an hour? Why $15 an hour and not $14 or $16 an hour or $25 an hour? In contrast, market-determined wages reflect supply and demand conditions that are specific to local market conditions and vary widely by geographic region and by industry.
2. A uniform federal minimum wage may be sub-optimal for many states, and uniform state minimum wages may be sub-optimal for many cities. A one-size-fits-all approach to a single, uniform federal minimum wage is really a “one-size-fits-none approach.”
3. Minimum wage laws require costly taxpayer-funded monitoring and enforcement mechanisms, whereas market wages don’t require enforcement.
4. Minimum wage laws discriminate against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups, like blacks. Milton Friedman called the minimum wage the most anti-black law in America.
5. Adjustments to total compensation following minimum wage hikes will disadvantage workers in the form of reduced hours, reduced fringe benefits, and reduced on-the-job training, and a lower quality work environment.
6. Many unskilled workers will face reduced employment opportunities because of minimum wage laws and will be denied valuable on-the-job training, and the opportunity of acquire experience and skills.