The Truth About Minimum Wage

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Republicans, both nationalists and conservatives, have been crowing about the recent failure of the minimum wage increase in Seattle. While it is always nice for our world view to be validated I feel this article is necessary so that we will not be misunderstood. After all Democrats are always eager to paint conservatives as the tools of big business even while they passed Dodd-Frank which concentrated 43% of the banking industry in 4 banks and Obamacare which doubled the profits of the insurance industry at the cost of rising premiums and deductibles for the middle class. Republicans, like everyone else, do want wages to go up. We just believe that raising the minimum wage particularly the federal minimum wage is the wrong way to go about it.

Democrats

Before I give our view I will debunk the points made by Democrats first. Whenever any policies are discussed the left will always bring up Denmark, Norway, and Sweden as their perfect utopias. Ask them point-blank if these countries have a federal minimum wage. As small as these countries are they have realized that a nationwide minimum wage might be apt for one location but would not work for another. In the context of the US a federal minimum wage designed for New York would price rural businesses out of the market but a minimum designed for rural areas would not be livable in New York. This is why these countries have minimum wage negotiated per industry instead of for the entire country.

Arbitrarily raising the minimum wage does not work either. A variant of that was tried in Venezuela in Petroleos de Venezuela, their national oil company. You may recall that just prior to their crisis they were also hailed as a model socialist country that the US should follow. Venezuela eventually nationalized the oil company. When they did they hired more people and increased their wages. The problem was they did not produce more oil nor did they sell it at a higher price. You just had more people doing the same amount of work at higher wages. This was not a problem while oil prices were high. When they bottomed out this became part of the reason we see the chaos we do in Venezuela today. Incidentally this is also why Trump is dangerous to Putin. More production by the US of oil and natural gas could cause a glut in the market which would cause worldwide prices to drop and ruin the Russian economy.

Republicans

As Republicans we do believe in the free market. Even nationalists believe in a free market just one bound within the nation. Labor like anything else is a commodity and follows the rules of supply and demand. When the supply of available labor is high then the price is low. In addition when the demand for available labor is high then the price for labor will increase as well.

We believe that instead of setting random numbers as the minimum wage the government should instead set policies that will help lower supply of labor and increase demand for it. This way the change to wages will be organic and something the companies themselves would have to do in order to get the best of the available labor. We think this will be safer as in leaner times companies will not be forced out or forced into bankruptcy by wage levels it can no longer afford.

On a related note this is why the people don’t believe the Democrats and media when they tell them we are at full employment. If we are at full employment wages are supposed to go up but they are stagnant. The Trump administration is doing things that we believe are necessary to change this. The best example is addressing illegal immigration. The slave labor provided by illegals and those provided by those with work visas such as H1-b increase the amount of labor in the pool. With more labor available potential employees have less power to bargain for higher wages. Removing regulations and providing tax reform also increases the amount of businesses in the US increasing the demand for labor therefore making each individual worker more negotiating power.

To sum everything up Democrats believe in legislating wage increases no matter what conditions on the ground dictate while Republicans believe in creating conditions necessary for the wages to increase.

 

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