(1) The minimum wage violates one of the most fundamental principles of freedom this country was founded on - the right of people to contract for work. An oversimplified example would be John Doe seeking employment with Acme Industries, Inc. Mr. Doe meets with the president of Acme to discuss potential employment. Mr. Doe has been unemployed for quite some time and desperately needs a job to put food on the table for his family. Acme desperately needs another employee in order to crank out the number of widgets that yields a profit, allowing Acme to stay in business and put lots of food on the table of Acme's president. Having no job, any wage that Mr. Doe can obtain from Acme would be an improvement for him. He doesn't need $15/hour, or $10/hour, but even $5/hour would help Mr. Doe make ends meet. He tells Mr. Acme president that he's worked with widgets before and is willing to work for Acme for $3/hour, thereby undercutting the offers from other prospective employees so he can get the job. At $3/hour, Acme would get an economic benefit from Mr. Doe's employment at $3/hour. Mr. Doe's wage plus all the other costs of production would yield a slim profit for Acme, so Acme's president offers Mr. Doe a job at $3/hour. Both Mr. Doe and Acme reach a voluntary, informed agreement that would benefit both. But alas, the government steps in and tells Acme and Mr. Doe that they are not allowed to voluntarily agree to a $3/hour wage - the minimum wage is $7/hour, which means Acme would lose money each hour that Mr. Doe works, and Mr. Doe remains unemployed. So both Acme and Mr. Doe are harmed by the government's interference with their right to contract for work. The basic freedom to contract for services which Mr. Doe and Acme should enjoy has been prevented by the government, all in the name of helping workers like Mr. Doe. Instead of hiring Mr. Doe, Acme hires no one, and simply requires increased production quotas from their current employees and raises the costs of widgets for its customers. Acme's workers now work longer hours, work harder, and consumers pay more for the widgets. Once again, the government has prevent two parties from freely and voluntarily contracting for work - this is a violation of basic freedom.
(2) If the goal of a minimum wage is provide unskilled workers a wage that improves their standard of living, why not set the minimum wage at $20/hour, or even $100/hour?? Why set it so low? I've yet to hear a logical argument from those in favor a minimum wage why it shouldn't just be set at a very high amount so that all such workers can have a very nice standard of living. After all, wouldn't $20/hour be much more beneficial to the minimum wage workers? Sometimes I hear the reason that "Well, if it's set too high, it will be too costly for the companies to pay and they won't be able to make a profit." This seems to be an admission that an imposed minimum wage does hurt private companies, and does interfere with their business model, but I guess as long as the interference isn't too harmful, it's ok - so the reasoning seems to be that it's ok for the government to interfere and hurt companies a little, but not too much. Well, if the government is stepping in and hurting companies, then the degree of the harm isn't relevant - it's the fact that the government is stepping in to hurt companies that is the point, whether it's a lot of harm or a little harm. Either way, the government is purposefully hurting private companies and frustrating the freedom of contract between employers and employees. This is well beyond the constitutional limitations of the government. Nowhere in the Constitution does it allow the government to interfere with agreements between individuals concerning work for wages.
(3) As the minimum wage increases, those jobs become more attractive to the younger generation. It increases high school dropout rates because high schoolers can obtain higher and higher paying jobs without graduating high school. As the minimum wage increases over time, more and more high schoolers drop out to get a job that is increasingly profitable, allowing them to get an apartment, car, and other necessities and wants without a high school diploma.
(4) As a corollary to number 3, above, even those who don't drop out of high school look for jobs at higher rates as the pay increases. With more teenagers in the job market, fewer older job seekers can find work, and these are the ones with families they need to support and mortgages they need to pay. It just stands to reason that the more teenagers enter the job market, the fewer people with dependent children are able to gain employment. Increased unemployment in this group ends up costing the taxpayers much more money, because government safety nets are used to help these people support their families. If they can't get a job because some high school kid got it, they need to rely on welfare, food stamps, etc. in order to support their families and make ends meet. Imagine if the minimum wage were $50/hour - how many high schoolers do you think would forego seeking a job, or stay in school to get a diploma, go to college, rack up college debt, and get a skilled job that pays just a bit more than the minimum wage. Why go through all that work to make just a few dollars more than minimum wage. When the job market is flooded with youngsters, adults with dependents have a harder time finding work, and not only do they suffer, but the safety net programs that are used cost taxpayers much more money, and we all suffer - all except the teenager who now makes enough to buy that fast car to show off at the mall on the weekends while they spend their money on clothes, CD's, etc. - instead of rent since they still most likely live with their parents.
(5) The more a company has to pay in wages, the more it charges for its goods and services. As the minimum wage goes up, these companies don't sit by idly and watch their profits decline without concern. They raise the costs of their goods and services in order to maintain their bottom line. So as the minimum wage goes up, so does the cost of things for consumers.
(6) Instead of hiring more individuals, when the minimum wage goes up, a company may only employ 100 people instead of 150 people, since it now costs more to employ them. They may outsource to other countries where it is cheaper to employ people, or require more productivity from their current employees rather than hire new ones; or replace workers with robotic or computerized workers that costs virtually nothing after installation and programming. This leads to higher unemployment overall, which is never a good thing in an economy.
(7) The bottom line is that the market will determine what a worker's value is worth. If there are hundreds of people without jobs who are willing to put widgets into boxes, but less than hundreds of job openings, the market will determine what the proper wage for such work is. If the company can fill all the positions by paying $3/hour, than that is what the wage will be. If a competing widget company wants to pay $5/hour, they will attract better qualified applicants, and the quality of their products and services will be better than its competitor who is paying a lower wage, and the higher-paying company will ultimately get more customers, forcing its competitor to take action to stay in competition. As companies compete, wages will naturally rise, and we will all be better off.
(8) With a minimum wage, companies competing know that there is a floor for wages, so they all set their wages at the floor, meaning that no companies will be willing to pay any more than that. So instead of having a variety of wages for the same unskilled jobs, all of them will receive the minimum wage set by government. This minimum wage means companies won't offer higher wages, so all unskilled workers are left with an almost colluded level of pay across the board, instead of a competition driven array of wages. There is no incentive for workers to improve the quality of their work because they know they will receive the same pay everywhere. There is likely no incentive for companies to pay higher wages, since they know the good workers and less good workers will all receive the same pay, so why should they pay the good ones more than the less good ones. It unnaturally corrupts the free market when the government sets a minimum wage and interferes with the freedom to contract for wages based on quality, supply, or demand.
This is a sufficient part one for why the minimum wage is not a good idea. The most compelling reason is freedom - people should be free to work for whatever wage they can agree on with an employer. With unemployment currently in excess of 8%, there are surely tons of people who would rather work for $3/hour than not at all. And there are companies that are willing to pay them $3/hour for work. But the government, with its minimum wage laws, is preventing these people the freedom to voluntarily work for agreed-upon wages, so the unemployment rate remains higher than it should be.
Remember, whenever the government interferes with our freedoms, we are always worse off. $3/hour is better than nothing, and people should be free to work for whatever they can agree on with an employer. The days of worker exploitation are over - there are numerous worker safety laws on the books, unlike in the early days of the industrial revolution, so let people and companies freely compete and contract for work and wages and the entire system will benefit employers, employees, and consumers.
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