In the past months, there has been a passionate debate over whether or not the minimum wage should increase. This debate was triggered mainly by strikes in the fast food industry, which are supposed to go nation-wide on Aug. 29. Many pundits at PolicyMic support the increase, some even calling it a moral obligation. Apparently, participating workers have nothing to lose, so the strike could last for a long time. Notwithstanding that the minimum wage was invented to explicitly create unemployment, supporters of the minimum wage are missing two main points in the debate.
First (and the supporters are right about this) the minimum wage has not been keeping up with inflation for the past 40 years. It is estimated that the minimum wage would be $10.68 had it been indexed in 1968. So, the problem is not that the minimum wage hasn't increased. The problem is inflation. According to the Bureau of Labor Statistics, the cost of buying something today is 6.7 times greater than it was in 1968.
Economists (even Marx) have known about this dramatic loss of purchasing power for centuries. But politicians want to listen to the voice of reason, which is why they created central banks to supposedly stabilize the economy. The Federal Reserve, created in 1913, backed up every bank note with 100% gold deposits.
But even without inflation, demanding an increase in minimum wage (and having a minimum wage at all) is immoral. It interferes with voluntary wage negotiations. If a person thinks he can live off $5 an hour, let him! By considering the minimum wage a floor no one can go under, then why are so many people, especially low-skilled workers, stuck in the basement? Are they not "worth" the minimum wage?
Increasing the minimum wage is also immoral because, in the long run, people who work for that price will be replaced by machines. Look at retail stores and banks. This trend is also creeping into the fast food industry, especially in Europe. This is not surprising since labor is one of corporations' the main expenses.
So rather than supporting fast food with workers' (simplistic) demand for a higher minimum wage, people who want to support these workers should instead demand the suppression of this institutionalized labor law, which hurts everyone. People should also demand a thorough restriction of government intervention, which is one of the main reasons for today's wild rate of inflation.
I am in not implying that without a minimum wage, we would create a perfect world. As we say in French, perfection is not of this world. However, I am implying that eliminating the minimum wage would end institutional unemployment, and therefore create more opportunities for everyone and a lower unemployment rate overall.