If you have a job, would you be willing to be paid less, if it meant an unemployed person could have a job?
If you don't have a job, would you be willing to work for less than the minimum wage if it meant you could have a job?
Clearly in the above example, the high minimum wage is doing more harm than good. But is this always the case? What does the research say?
According to the U.S. Bureau of Labor Statistics, in 2013 approximately 4% of U.S. workers received the minimum wage (or less). See Report 1048. (The majority of those workers were below the age of 24 and many of them lived at home with mum or dad. The rest worked for more than the minimum wage—see the video below). So why do businesses pay more to workers than they are required to by law? Wages in general are determined by supply and demand, not by government decree. When there is a high demand for labour, wages rise. When there is full employment wages not only rise for highly skilled workers, they also rise for the least skilled workers (in fact—as a percentage of their wage—they will tend to rise more for the least skilled), because few people want to do jobs like cleaning, or fruit picking when they can easily get better paying, and more satisfying jobs.)
So why do some big corporations support a higher minimum wage?
It’s not good to be poor. But would you rather be poor in the Philippines, or would you rather be poor in America? Obviously it is better to be poor in a rich country than to be poor in a poor country. The more a country produces, the richer that country is.
Living conditions and rates of pay were improving before there was such a thing as a minimum wage, and would have continued to improve if the minimum wage was never introduced.
Full employment was the natural state of affairs before the minimum wage. (Everyone of working age, who was able to work, and was willing to work, worked. Today, many people would rather get paid $300 a week for doing nothing, than get paid $500 a week for working full time. This is unfortunate because while they are not working they are not developing skills that can improve their lot, neither are they increasing their countries productivity.)
* It is not widely known that in the early 20th century, the Eugenics movement strongly favoured the minimum wage in order to stop blacks and Asians taking jobs which they thought rightly belonged to whites. The following takes an indepth look at how this came about and why it was believed. See An Honest History of the Progressive Movement