Why Real Estate Investors Should Oppose the $15 Minimum Wage

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Recently, Brandon Turner made the case that increasing the minimum wage will help real estate investors, particularly landlords. I have no wish to pick a fight, as I think Brandon is basically the man.

However, I have to disagree with his thesis, and here’s why (and by the way, yes, I am a bit of an economics nerd):

It’s All About the Jobs

The big question is not whether people working at the minimum wage deserve a raise; it’s whether artificially increasing the minimum price level an employer and employee can legally agree to will price certain people out of the job market and increase unemployment. Most jobs aren’t currently affected, as very few even come close to the current federal minimum wage ($7.25/hour). In fact, according to the Bureau of Labor Statistics, only 4.3 percent of wage earners worked at or below the minimum wage, and most who “made up about half of those paid the federal minimum wage or less” were under the age of 25.

Still, some jobs will fall below that artificial line and basically disappear. For example, when was the last time you saw a movie usher?

The economic theory goes like this: on average an employer will pay an employee what the market will bear. In other words, an employer will only pay to add an extra employee if that employer expects to receive a higher benefit in return than the wage the employee is set to make. Otherwise the employer would lose money and be engaging in charity.

Related: $15 Minimum Wage: Why Real Estate Investors Should LOVE This Idea [Opinion]

Therefore, if the government artificially increases the minimum wage, the employer must pay more than the market rate. It quickly gets to the point where hiring a low skilled employee would actually cost the company money, and because of this the employer decides that instead of paying the mandated increase, he won’t hire at all (or he will make layoffs).

Graphically, it looks like this:

Minimum Wage Chart

The Evidence

The first question that should come to mind whenever a minimum wage increase is proposed is “why stop there?” Instead of raising the minimum wage to $15/hour, why not $100/hour? At that level, everyone would be rich!

Well, at that level, the above theory becomes painfully obvious. Of course at $100/hour it would increase unemployment. Well, the only difference with lesser increases is that those effects are smaller and often on the margins. The fact that these changes are usually modest explains much of the recent pushback against the “classical” economic theory. This despite the absurd conclusions you reach if you take the opinion that the minimum wage doesn’t increase unemployment and then push that to its logical extreme, as with the $100/hour example given above.

So for example, what will be the effects on unemployment if the federal minimum wage is raised from the $7.25 to $7.35? The answer is “who cares?” It’s trivial. But again, that doesn’t change the general theory. Economists David Neumark and William Wascher explain this point further in their review of the literature,

Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.

Much of the controversy over the minimum wage started with a study in New Jersey regarding fast food workers that found no change in employment after a minimum wage increase. However, a re-evaluation of that study found it to be flawed and that in fact, the minimum wage increase “led to a 4.5 percent decrease in employment.” Furthermore, a study by the Congressional Budget Office estimated that increasing the federal minimum wage to $10.10 would cost 500,000 jobs, while a study from Jeffrey Clemens and Michael Wither estimates that “over the late 2000’s, the average effective minimum wage rose by 30 percent across the United States,” and that “reduced the national employment-to-population ratio by 0.7 percentage points.” That amounts to about 1.4 million jobs.

More importantly, as Neumark and Wascher note, these job losses don’t affect everyone equally:

“…the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

As mentioned above, the young make up the majority of those who work at the minimum wage, and so they are the most likely to be affected by any minimum wage law. Economist Mark Perry provides a handy chart that shows that teenage unemployment rates are almost perfectly correlated with increases in the minimum wage. Check out the chart; it’s not a coincidence, folks.

And this is a bigger problem than just costing teenagers’ jobs; it cuts the bottom rung of the economic ladder out from under them. Returning to the paper by Clemens and Wither:

We find that binding minimum wage increases significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings. This curtailment of transitions into lower middle class earnings began to emerge roughly one year following initial declines in low wage employment. Reductions in upward mobility thus appear to follow reductions in access to opportunities for accumulating work experience.

Finally, for those who like to point to Australia’s $15/hour minimum wage, I will simply note that Australia has a notoriously high cost of living, making its minimum wage have less of an effect. Furthermore, it doesn’t explain how countries like Germany, Sweden and Finland get by with no minimum wage at all.

The Case of Seattle

Brandon astutely notes that “McDonald’s may replace some of these workers with a machine, but that’s happening anyway.” Automation certainly is happening regardless of what we do about the minimum wage. Still, while I don’t want to sound like a Luddite, I see no reason to accelerate the process. Bill Gates has warned that “if you raise the minimum wage, you’re encouraging labor substitution,” and policy analyst Erin Shannon predicts that Seattle “will be ground zero” for such automation.

Right now, McDonald’s has ordered 7,000 touchscreen kiosks to replace cashiers and Starbucks is testing a mobile app that allows people to order without talking to a cashier. These companies are not alone in this process.

Related: How to Improve the Economy and Reduce the Deficit…

Regardless of automation, the new law’s effects may have already been quite harmful to Seattle, even though Seattle, like Australia, has a high cost of living so the $15/hour minimum wage isn’t as high as it first appears. Still, before the law had even passed, it helped influence Northwest Caster and Equipment to move its business to the incorporated Lynnwood, and an independent study by Peter Nickerson estimates job losses in the city from somewhere between 4,700 to 19,000.

And as for Us Real Estate Investors…

As the above analysis shows, it’s not just the case that companies will try to pass on the extra costs of increasing the minimum wage to consumers (although they’ll try to do that, too). These companies will in fact hire fewer people and probably lay off some people off as well.

In my experience as a real estate investor, especially in lower end areas (where there will be more minimum wage workers), the number one expense is delinquency and the lost rent, eviction costs and turnover expenses that come with it. And the biggest reason I hear for why people fall behind is that they lost their job. If minimum wage increases also increase unemployment (as the evidence strongly suggests), this would increase delinquency and cost landlords in a roundabout way.

Indeed, even if the minimum wage did not increase unemployment and did lead to increased rental rates, it would also increase other costs that real estate investors had from materials to utilities to, well, employees. The only thing that would stay fixed is the mortgage. So in other words, it would be little better than a push.

And as with analyzing a potential real estate deal, if just beating breaking even is the best case scenario and the probable outcome is a significant loss, it’s best to say no and walk away.

Now it’s time for you to weigh in: Do you agree with my assessment about the consequences of a raised minimum wage?

If not, feel free to make a counterargument in the comments below!

About Author

Andrew Syrios

Andrew Syrios is a real estate investor in Kansas City and a partner in Stewardship Properties along with his brother and father. Their company owns just over 500 units in four states.

33 Comments

  1. Masroor Ahmed

    I generally love Brandon’s posts, but this is the post I was hoping someone would respond with. Andrew, very well said. I would add that the position noted in this post, or especially those supportive of no minimum wage (which I am a proponent of) are vilified in the US (often by those who don’t truely represent min wage workers…a la media or unions) whereas the data suggest that no/lower minimum wage would lead to MORE robust employment options at the lower end of the skilled workforce w/ more opportunity to enter and advance through on the job training. Excellent post.

  2. Stephen S.

    Of course there is no perfect way of knowing whether a change like this will produce benefit or detriment. Nor really; which is more probable as this depends on the effect of events far beyond the field of economic or even ecumenic prediction. Moreover, mechanically increasing the minimum wage presents a pregnant threat to the basic American concept of decentralized decision making. One of the very real problems which the economist, or the economic philosopher, in citing problems in economic policy or performance, is being held accountable for their solution. But it is a sad fact that within the broad framework of democratic and especially American politics it is very often true that no satisfactory solution does, in fact; exist. And typically those which are the most satisfactory, at least to their authors, are the least consistence with our political traditions.

  3. Bradley Bogdan

    I’m sure you’ve read the excellent work done in Seattle, Oakland, San Francisco and other places before putting minimum wage hikes to vote (either in ballot measures or via the local gov’t), as well as the previous effects of minimum wage increases in places like Sea-Tac and San Francisco, among others. That work points out the following issues with the reasonably simple theory you’ve put forth as to why a $15 minimum wage is bad news across the board, namely:

    – We currently pay much of the difference in living costs and income for many low or minimum wage workers through gov’t programs, so a raise in the minimum wage (provided its below or at the “living wage” level) actually reduces gov’t expenditure while at the same time raising tax revenue.
    – Minimum and low wage workers tend to spend their increased wages locally, instead of saving or investing them in other places as happens with benefits for higher wage people, providing a notable local boost to the economy.
    – There is an ethical side to the minimum wage as well, where there is an overwhelming belief in America that if you work full time, you should be able to afford the basics. Many low or minimum wage full time workers cannot afford basic living expenses in urban areas.
    – A $15 isn’t appropriate across the board, you’re correct in pointing out that, above the cost of living, minimum wage hikes do more harm than good. The minimum wage shouldn’t be the same in Buffalo or Detroit as it is in NYC or SF. The living costs aren’t close to being the same (especially housing!). While we can debate what that level is in many places, I think we can agree that under $11/hr in someplace like SF (so roughly $1900/mo PRE-TAX) isn’t above the cost of living.

    So basically, what the minimum wage debate at this point comes down to, is who would you like to bear the costs of living for low or minimum wage workers, the gov’t, or the people that are employing them? I’m perfectly ok with paying an extra $.25 a cheeseburger if it means that that employee is above the AMI based cap for things like Section 8. It makes life simpler for all of us.

    • Alan Mackenthun

      There is an ethical side to this. Who the hell are you to say what I or anyone else can or should work for? Ethically, you have no business whatsoever saying what someone should be willing to work for. If I want to get some experience working in a vineyard for $5/hr so I can cover my travel and uniform expenses, who the heck are you to say I can’t?! If I want to hire a teenager to help me clean our an apartment for $7/hour and they have nothing better to do with their time, what business of yours is it? Your complete load of crap is directly responsible for high teenage and minority unemployment rates and ethically speaking – your whole argument is just plain evil.

      • Jeff Lee

        “If I want to get some experience working in a vineyard for $5/hr so I can cover my travel and uniform expenses, who the heck are you to say I can’t?!”

        Easy solution: donate any money in excess of $5 to a local charity.

        ” If I want to hire a teenager to help me clean our an apartment for $7/hour and they have nothing better to do with their time, what business of yours is it?”

        If minimum wage is >$7, which it already is ($7.25), what teenager or adult will want to help you out at $7? (Sure, they could do it because they wouldn’t have to pay payroll taxes and they would come out ahead, but you get my point. I hope.)

        “Your complete load of crap is directly responsible for high teenage and minority unemployment rates and ethically speaking – your whole argument is just plain evil.”

        Talk about talking out of one’s butt.

        You failed to address any of his points and went with the red herring argument.

  4. “In fact, according to the Bureau of Labor Statistics, only 4.3 percent of wage earners worked at or below the minimum wage, and most who “made up about half of those paid the federal minimum wage or less” were under the age of 25.”
    – I’m unsure of how they came up with this as the CBPP (http://goo.gl/FW6wul) shows that most min. wage earners are NOT young. As a matter of fact, most are adults (84 percent are over age 20; 47 percent are over 30).
    – Furthermore, the low-wage workforce has gotten older and more highly educated in recent decades: between 1979 and 2011, the share of low-wage workers (those earning less than $10 per hour in 2011 dollars) aged 25 to 64 grew from 48 percent to 60 percent, while the share with at least some college education grew from 25 percent to 43 percent. (http://goo.gl/FW6wul)

    “The first question that should come to mind whenever a minimum wage increase is proposed is “why stop there?” Instead of raising the minimum wage to $15/hour, why not $100/hour? At that level, everyone would be rich!”
    – Yeah, why only stop at $100? Let’s go to $500! No, $2,000! No, $100,000! John Stewart sums it up for people with this sort of mentality right here (http://goo.gl/FW6wul)

    “Still, some jobs will fall below that artificial line and basically disappear. For example, when was the last time you saw a movie usher?”
    – When was the last time you saw a house slave? (Note: This is sarcasm. Slavery and inequality aside, technology will render certain jobs obsolete. That is still no excuse to pay people in those jobs pennies.)

    “The economic theory goes like this: on average an employer will pay an employee what the market will bear. In other words, an employer will only pay to add an extra employee if that employer expects to receive a higher benefit in return than the wage the employee is set to make. Otherwise the employer would lose money and be engaging in charity.”
    – The problem with this is (a) conflict of interest (with maxing profit), (b) subjectivity, and (c) greed. Should an employee pay someone more to keep them? Of course! But human greed stands in the way of paying someone more VERSUS maxing profit. Also, could you have the butthole employer who chooses to say, “I don’t think you’re worth anything over $8.00.” It’s all subjectivity. What we need is objectivity (i.e., tying min. wage to inflation).

    “Still, before the law had even passed, it helped influence Northwest Caster and Equipment to move its business to the incorporated Lynnwood, and an independent study by Peter Nickerson estimates job losses in the city from somewhere between 4,700 to 19,000.”
    – Who do you blame when the insurance company decides to drop your policy? If a company doesn’t want to pay their low tier employees more, then let them go. However, making min. wage a scapegoat isn’t fair and is unreasonable. I don’t hear “free market” advocates making a fuss when companies decide to outsource their labor (e.g., call center) to a foreign country.

    “Furthermore, a study by the Congressional Budget Office estimated that increasing the federal minimum wage to $10.10 would cost 500,000 jobs”
    – A decrease in jobs isn’t 100% a bad thing. For example, a person who works 2 jobs making $7.25 is now able to work at one job making $10. Yes, it is a decrease ($15.50 vs $10), but it does mean the individual can spend less time on, say, commute, which can cost money itself. (This is just a crude example.)

    – Looking/Highlighting this piece of data is very short-sighted. You make no mention of the benefits. Yes, we take a step backwards (-500k jobs), but what of the 13.4 million workers who stand to benefit and another 4.7 million with wages slightly over $9? And what of the stimulus effect a raise in wage would generate? There is simply too much that you don’t address.

    – At the end of the day, there will be damage (when won’t there be?) if minimum wage is raised. However, by taking one step backwards, we get to take twenty steps forward.

    • Very well said. I wish people would do thier homework before they post ridiculous nonsense. Thank you for shining a bright light on how the system actually works. Keep paying people less and less and pretty soon we’re all on welfare and fighting each other for 6$ an hour jobs. Good Grief!!

  5. Ryan Ball

    Great points in this post. I had a conversation with a Federal Reserve economist on this topic and she made largely the same points. If raising the minimum wage was all it took to improve the fortunes of lower income workers, why stop at $15/hr.? Also, relatively few workers actually earn the minimum wage, as was pointed out here. As a real estate owner, what I want is a better overall economy so there are more potential rent paying tenants. Businesses make economic decisions and if the marginal cost of an employee exceeds the marginal revenue of that employee, you won’t hire that employee. In my mind, the minimum wage issue is more politically than economically motivated.

  6. Cody Steck

    I completely agree with this article. I am against raising the minimum wage because it will only push the cost of living higher in roundabout ways. Instead of simply raising the minimum wage, I believe our society needs to engage in financial education as well as learn how to push themselves to make it into higher paying jobs. Like the article stated, it all comes down to cost/benefit; If you have more to offer the employer, they will be willing to pay you a higher wage, thus, eliminating the need for a higher minimum wage.

    Great article!

  7. Larry T.

    Andrew this is an excellently well written article–worthy of an op/ed in the New York Times. The chart, however, made no sense to me at all. Maybe some clarification would be helpful.

    You are a good writer. I appreciate all the research you brought in. In fact, it makes your point more of a logical conclusion than an opinion. Well done.

  8. Adam Brown

    I completely disagree with this article.

    The premise that increasing minimum wage will actually cut jobs, is primarily the reason I think this article’s entire reasoning is flawed.

    Put simply, increasing minimum wage, to a livable wage, increases the sale of goods and services, inter alia. Meaning, more jobs! E.g., the trucker who drives 60 hours per week, carrying goods right now, will not be able to do it alone. More truckers will be needed to be hired, as there is a greater demand for such goods.

    Additionally, if you’re investing in the majority of urban areas, where there are poor, unskilled workers, knowing a tenant earns a livable wage is reassuring. This will pump money into the economy. I’m not sure if any of you follow the market, but I certainly do! The U.S economy is on a beautiful growth trend.

    I’m prepared to debate everything I mentioned, feel free to PM or comment. Thanks!

  9. @Andrew, very thought provoking piece on a topic that deserves serious consideration and well intentioned debate.

    A couple things struck me: Leaving aside the reductio ad absurdum of “why not $100/hour?”, the issue the @Bradley Brogdan mentions is a critical point; The choice really comes down to who we believe should be paying employees’ living wages.

    Should the employer be responsible for providing the living wage or should it fall to the government funded by taxpayers? The reality is that unless we are willing to walk through throngs of starving beggars on the street every day, most low wage people are going to receive a living wage in some combination of their job, their second or third job (which has its own set of costs we pay for) and government assistance paid by you know who.

    Studies have shown that a Walmart store costs taxpayers about $900,000.00 per year in assistance payments to their underpaid employees (see here: http://www.huffingtonpost.com/2013/05/31/walmart-taxpayers-house-report_n_3365814.html or if Forbes is more to your taste see here: http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/ ) These costs are absolutely coming out of someone’s pockets; I believe they should be coming out of the pocket of the employer rather than from the taxpayer’s. As things stand now Walmart is the biggest welfare queen in history (OK well at least in terms of employee support; other companies may rank far higher in corporate welfare from price supports and/or protection schemes).

    The last thing is about why it’s OK for high cost of living cities to have a minimum wage when it’s not OK in general(?)

    Thanks for lighting the match-
    Giovanni

    • Larry T.

      Good point. I thought about mentioning this too, though I would take the opposite view.

      When a minimum wage causes an employer to pay more than they otherwise would, it is essentially a tax on that employer. If the government wants a minimum gauranteed income, why shouldn’t everybody be liable for the tax to fund it? It is punitive to put it all on employers. Tax them based on income like everybody else.

  10. Jerry W.

    Speak of the devil, or his advocate. I agree with your conclusion in general that a sharp increase in minimum wage will have harmful effects on many workers. I understand the cost of buying at Walmart may not be affected as much as some because all of those products are made in China. The cost of selling is quite low to the cost of the overall price. McDonalds would be different. The cost of the store front and equipment is quite high, but you cannot double the labor cost and claim it will only make a difference of 25 cents a sandwich. The paper wrapper cost will go up as will the cost of paper cups, flour, fruit, salads, etc. You make a quarter pounder go up to $12 and there will be a lot of workers laid off. Folks will eat bologna sandwiches again or even cook a meal. A lot of folks at minimum wage are convenience workers who people can do without if the cost is too high. There would of course be inflation for the businesses who survived the increase. Once you have purchased a rental inflation is your friend up to a point. It gets too high and folks move back in with their parents. Gas station attendants are almost non existant now days. The same will become true of waiters and busboys and dishwashers. Kodak moved thousands of jobs to Mexico for these kinds of reasons. There is a reason car prices have dropped and that many are made with parts from China and other countries. Jobs increase with an increase in the demand for the item they produce, Jobs decrease when demand decreases.

  11. Robert Horton

    Andrew, thank God there is someone with an economic background on this forum. I read Brandon’s blog and was dumbfounded by the number of investors who AGREED with him. Bottom line, he just wants someone else to pay for his renters’ ability to pay their rent for HIS benefit. I don’t think he really cares how much money they make as long as he gets his……sorry, Brandon, the truth hurts.

    If you’ve never met a payroll, especially in the service industry, then it’s hard to understand why you would pay someone $7.25 per hour. I was in that type of business from 1992-2003. I probably went through about 75 employees over the years because it was not a “career” type of job. I can count on one hand how many I paid the “minimum” wage. Why? Because they would tell you up front they wouldn’t work for that wage so most made somewhere between $8-$10 per hour……LONG before the government and others started talking about a minimum wage of $10 per hour. And I’m located in South Carolina where the cost of living is very low and, unfortunately, we don’t have the best and brightest in the gene pool!

    • Tim Roos

      Robert, you talk as if economists agree 100% that raising the minimum wage is deleterious to the economy and anyone who believes it would be advantageous to raise the minimum raise must not have an “economic background”. That couldn’t be further from the truth!! Ask any non-partisan economists if this debate is “settled” and they will tell you it definitely is NOT settled. As many other posters have pointed out, this is actually a very complicated subject and very much up for debate by economists.

  12. Adam Selene

    Another counter argument is that these are actually sentient human beings you’re talking about. Real people who do real work, who should be able to see a doctor or dentist if they need to We could make a similar case for the economic benefits of slavery if we are ignoring ethics and not counting the cost in human suffering.

  13. Jacob Vincent

    I’ve stared at more supply/demand curves that I would care to admit during my time at b-school. My issue with making an economics argument for minimum wage is that many of the arguments are created from an ivory tower. Economists aren’t known for being able to manage a P&L or increase customer demand/satisfaction.

    Yes, raising a minimum wage creates a ripple effect of expectations across the board. But raising the minimum wage shouldn’t be the only factor a major employer takes into account when making the hire vs. automate decision. It’s a stretch to say that raising minimum wage impacts employment to the stage that a landlord can’t find any tenants. Those publicly-traded employers that choose not to hire are just using a rise in minimum wage as a scapegoat.

    Economists also tend to ignore the ‘under the table payments’ economy, as well as the gig economy, because such research would require them to scuff their wingtips and actually talk to..*gasp*…a common American.

  14. Joseph Druther

    Verrrry interesting discussion! I happen I think that the article is correct! I am a very hard working young guy who busts my butt to save and invest my extra pennies. I do my best to be worth my hourly wage. I can out learn and outwork many of my peers. Why should someone who has minimum skills and puts forth minimum efforts be ENTITLED to money they are not worth? People are not entitled to a house just because they showed up to the party. They aren’t entitled to a nice standard of living just because other people have worked really hard to afford that nice standard of living. It’s like I try to explain to my extremely unmotivated lazy brother, “you claim housing, food, water, and other ‘necessities’ should be free, but if all of a sudden you were dropped in the middle of the woods, that claim goes out the window. You hungry? Go kill something. You cold? Go build a better shelter. ”
    How did we get to the place in America where we feel like we are ‘owed’ these wonderful luxuries that other people work really hard to get?
    I don’t understand it.
    The whole slavery comparison is silly too. We aren’t claiming ownership of minimum wage employees. You want to make more? You have options! Work harder. Work smarter. Show incentive and motivation. Find another job if you want! Start your own company!
    The world is yours for the taking, but nobody’s going to just five it to you.

    Rant over 😉

    • Stephen S.

      Dear JOSEPH DRUTHER,

      In case your question isn’t rhetorical – the US has a political system which is based entirely on the concept of Pay-To-Play. Essentially all votes in the US are ‘bought & paid-for’, as the saying goes.

      The sole reason that the things you mentioned have evolved into being called “rights” is because of vote-buying by politicians. Everybody votes for the person who promises them the most, usually financial, gains. From the local councilman who “got us that new park” and “puts lights on the playground” (by securing state or federal grants) all the way up through every layer of elected office including the POTUS. People tend to vote as they have been paid to vote, or as they anticipate being paid to vote.

      Now, with that concept in mind; ask yourself your own questions again.

  15. Stephen S.

    The Law, and what is Legal, is often an amusing thing.

    So I may as well add my additional thought.

    In the US we have a long-established and well tested legal concept which can be stated briefly as the banning of Conflict Of Interest. This is why spouses cannot be compelled to testify against each other and why judges cannot preside in a court case in which they are involved or may benefit from as a result of their rulings.

    In keeping with this well accepted-as-valid legal tenet – no one who takes money from the government in any form should have the right to vote for the entire time that they are receiving such funds and for a period of one year after they stop receiving them. This would eliminate a substantial portion of the vote-buying business of our elected representatives.

    Although I am sure that there would be no sky anywhere large enough to contain the smoke which would result if this policy were actually implemented.

    stephen
    ————–

    Larrangement of Contract Law. The short version is that any legal aged adult can legally contract to do, or not to do, any legal activity, with any other legal aged adult. One of te

  16. Jeff Brown

    Yeah, let’s have ‘just a little artificial gov’t control’ of our ‘free market’. It won’t hurt much, really.

    Artificial won’t work, never has, never will. Utopia works on the printed page only. We’re either a merit based, free enterprise economy/culture, or we’re collectivist. This argument is doomed to derail into the nonsense that they can peacefully coexist. At some point the discussion morphs from minimum wage to ‘Geez, how much rent do you really need for that rental, you greedy landlord?’

    Beware what you wish for.

  17. Mark Lenox

    Thank you, Mr. Syrios! Reading your very well thought-out and well documented post was a pleasure. It is very encouraging to know there are still those of us who believe in economic freedom, as opposed to central planning by those in power.

  18. karen rittenhouse

    Hi Andrew:
    What a great post! Anytime you can stir this kind of passion, you’ve done well.
    Not a huge fan of government regulation – though someone needs to look out for the little guy… Part of the reason this is such an ongoing debate.

    To say the government really doesn’t know what will happen as a result of an increase is baffling to me as they’ve raised the minimum in the past…

    At any rate, it matters to everyone. Personally, we have employees (though all make more than minimum). Whether or not we had to provide insurance, for example, would have made a difference in if and how many we were able to keep. Paying salaries is always a concern.

    Naturally, wages and job availability make a difference for our tenants. This is a huge topic and ripples out to everyone, ultimately.

    Thank you for taking on such a powerful post. Thank you for stirring thought and conversation.

  19. Alan Mackenthun

    Thank you Andrew. I completely agree with what you’ve said. I’d like to highlight one additional argument and really the only one that matters to me. Just what is the role of the federal, state, and local government in setting wages between any two people supposedly free people? The obvious answer is it is not the responsibility of any level of government and especially not the Federal government. Whether it’s good or bad for the economy and whether it increases inflation or not is tertiary. In a free country two people should be able to agree to contract for employment as they wish – ESPECIALLY for the key aspect of the price of employment.

    If an elderly person wants to work at a non-profit for $5/hour just to cover a few of their expenses, who is anyone else to complain? If I want to work at a vineyard for $5/hour to get some experience and so I can help keep the wineries doors open so it is available when I have guests, who is anyone else to complain? If I want to hire a teenager for $7/hour to help clean up an apartment, is it anyone else’s business. If I and an untrained but bright minority agree that I will train them for 4 months at $5/hour and then if successful I’ll hire them at $20/hour, shouldn’t I be able to do so?

    Minimum wage laws have no redemptive value. They are simply evil.

    • Jeff Lee

      “Just what is the role of the federal, state, and local government in setting wages between any two people supposedly free people?”

      To protect the common worker from getting screwed over by businesses.

      “In a free country two people should be able to agree to contract for employment as they wish – ESPECIALLY for the key aspect of the price of employment.”

      The idea of a minimum wage is to protect those at the bottom. If you don’t grasp this idea now, you never will the future.

      “Minimum wage laws have no redemptive value. They are simply evil.”

      No. What’s evil is corporations paying workers as little as possible which leads to the state/federal government having to subsidize workers on the taxpayers’ dime.

      QUESTIONS TO YOU:
      1. Do you want your tax dollars being spent on your fellow Americans because they don’t make enough or do you want corporations to pay a higher wage so our tax dollars can go towards education, infrastructure, and public servants?

      2. Do you want the “free market” to decide wages? If corporations aren’t paying >$10 right now, what makes you think they’ll pay >$10 if minimum wage is abolished? I have faith in Jesus coming down before corporations paying >$10 on their own volition.

    • Mark Lenox

      Bravo, Alan. Glad to see some people get it. Those who believe there must be a minimum wage dictated just don’t understand that it must stem from a foundational belief that there are some people who are unable to provide for themselves. They are the ones demeaning to certain groups of the population.

      Give a man a fish, he eats for a day. Teach a man to fish, he eats for a lifetime.

      The other thing that makes me shake my head is how some, even on a capitalist website such as BP, believe that business owners simply have a pile of cash sitting in some store room. They will just sigh and hand over more money to employees than the value of what those employees are providing. It’s literally an ignorant, illogical and insane philosophy to believe such things.

  20. Russell Brazil

    I am against the minimum wage for a number of reasons. I always joke I should start a PAC called Liberals Against The Minimum Wage…..however the minimum wage being raised could actually be good for real estate investors. The minimum wage contributes to inflation, and inflation is the friend of the real estate investor.

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