Opinion: Get SC Working Again by Nullifying Federal Minimum Wage Laws

I remember seeing firsthand the tragedy of government intrusion on small businesses when my friend who owned a restaurant had to lay off some of his employees when the minimum wage was increased; he simply could not afford the increase in payroll. What started out as the government’s good intentions turned out to be very bad for the people it intended to help. When our government increases the minimum wage artificially above the market price for unskilled labor it causes an increase in unemployment and hurts low-skilled job seekers.

Should the government step in between two individuals to prevent them from a mutually advantageous trade? As Economist Thomas Sowell so aptly put it in Basic Economics, “Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.” The federal minimum wage law is misguided and puts a value judgment on what a “fair” wage is, rather than considering what is in the best interest for workers and the employers. 

During Mitt Romney’s presidential campaign in 2012 the Wall Street Journal went ballistic over his comments suggesting that the minimum wage should be tied to the consumer price index (CPI) and increased with the rate of inflation. His comments demonstrated either a lack of basic understanding of economics or trying to merely pander to a particular political constituency. Most economists agree that increasing the minimum wage is a bad idea because it increases unemployment. The increase to the minimum wage decreases the demand for labor and increases the supply of labor which causes low-skilled workers to lose their jobs and prevents others from finding new ones. So why do politicians advocate the minimum wage? Simply put, it’s all politics. The fact that the economic data indicates the minimum wage actually hurts low-skilled workers is not politically feasible juxtaposed with the idea of a social “safety net” for low-skilled workers. Another threat to job growth is ObamaCare which will be a huge cost to small business owners and will force owners to lay off employees. Recently Rep. Bill Chumley pre-filed a bill in the SC house to nullify (invalidate) the enforcement of ObamaCare to save thousands of jobs. Why not use the 10^th amendment to nullify other federal laws that prevent people from finding work and remove the obstacles that prevent employers to hire more people?

People who reject the idea of eliminating a minimum wage feel that employers would exploit their employees, however, there is no empirical evidence that this would occur in today’s market driven economy. Currently Switzerland, one of the wealthiest nations, does not have a minimum wage and has a very low unemployment rate. As far as I know, I have not seen any forced labor camps, sweat shops, or suicide nets around buildings in Switzerland as of lately.

Another false assumption is that people only work for money. Renowned psychologist Fredrick Herzberg's two factor theory states that wages are “dissatisfiers” and what really motivates people at work are the opportunities for development, achievement, and recognition, etc. Recently, I met a retired man, Bob, who worked at a big box retail store. He told me that he enjoyed working not because of the extra money, but because he loved to meet new people and work on bikes, this was his “satisfier.” Eliminating the minimum wage would increase the demand for businesses to hire more retirees like Bob.

The minimum wage not only prevents retired people from being hired, but also teens and minorities who suffer the most. South Carolina's teen unemployment is the second highest in the nation. The minimum wage limits the number of low-skilled jobs and leaves many young people unemployed, which delays the acquisition of skills and experience needed to advanced their careers. If legislators would nullify the minimum wage law, small businesses could afford to hire young people as apprentices to become skilled workers while earning money; this would be a better solution than a young people graduating from a technical college with debt and no guarantee of a job. Right now there is a high demand for skilled workers but not enough human capital.

Our economy has too much government intrusion that stifles job growth. The fact is that the minimum wage hurts the low-skilled workers. South Carolina has a unique opportunity to create common sense policies, shaped by sound economic principles instead of settling for the status quo and the mirage of political reform. Currently the unemployment rate as of November 2012 for SC is 8.3%. We must expect more from our leaders in Columbia and Washington and demand them to eliminate the policies that hinder job growth and create pro-business legislation to get all citizens working again.