Raise the Hammer

Grassroots, if a business doesn't pay its workers enough to stay alive then they won't have any workers. Furthermore, businesses that only pay their workers enough to live, but not enough to travel to work, won't have workers either. Therefore, if you want to have happy, productive people come to work for your business, your pay scale must reflect what it takes to do this.

Any business that arbitrarily decides that they will not pay more than $2.00 an hour, will likely find themselves with very few workers to choose from, therefore hurting their business in the long run. Over time, the businesses that strike the right balance between happy, productive workers and healthy profit margins, will be able to plow these profits into more stores, while keeping prices low for consumers.

In fact, by utilizing labour as effectively as possible, stores such as Walmart allow lower income consumers to purchase goods much cheaper than they would be able to otherwise. This has the effect of increasing the purchasing power of each dollar of income, thereby increasing the wages for all consumers.

Furthermore, businesses are willing to pay workers high salaries, if these workers can bring a high level of skills to the table. In this case, businesses that fail to pay market rates for high skilled workers, even if they are higher than what the government mandates, will also find themselves losing market share to businesses that do.

Minimum wages are also punitive to those workers who don't need what the government tells them is an acceptable wage. If, for example, a teenager who lives at home wants to develop work skills, but can do so at $2.00 an hour, why shouldn't that person be able to make that wage agreement with the employer? Even though both parties would benefit from this arrangement, the government experts decide that it is unacceptable.

The only thing that results from banning this arrangement, is that the economy has less workers to produce output, thus increasing the costs for consumers and the worker has to delay learning valuable skills that will slow his earnings potential. How is this a good thing?