Why We Should Abolish the Minimum Wage: A Free Market Perspective

By Clem Ziroli III

The minimum wage is one of those economic policies that often wins public favor, fueled by the belief that it helps low-income workers. However, as an advocate for free-market principles, I argue that this well-intentioned legislation not only fails to help the marginalized segments it aims to uplift, but it also harms them, affecting low-educated people, minorities, and young workers most adversely.

The Myth of Helping Low-Educated Workers

At first glance, the idea of a minimum wage appears to help low-educated workers, who usually hold low-skilled jobs. In reality, however, the minimum wage limits the job market for them. By artificially inflating the cost of labor, businesses become more inclined to replace low-skilled jobs with automation or to outsource these roles to countries where labor is significantly cheaper. This means fewer jobs for those who need them most, effectively squeezing them out of the job market altogether.

An Unfair Disadvantage for Minorities

In an ideal world, everyone would have equal access to education and job opportunities. Unfortunately, systemic barriers often place minorities at a disadvantage. The minimum wage exacerbates this inequality by creating an economic environment where only those with higher skills and education are employable. For minority communities, which often have a higher percentage of low-skilled or unskilled workers due to a variety of systemic challenges, the minimum wage becomes another obstacle rather than a solution.

The Unintended Consequence on Young Workers

Young workers, many of whom are entering the job market for the first time, face a unique set of challenges when it comes to the minimum wage. They often lack the experience or qualifications for higher-skilled jobs but are willing to work for less to gain experience. The minimum wage, however, removes this option altogether. Businesses are less likely to hire young, inexperienced workers at the government-mandated rate when they could hire someone with more experience for the same cost. This robs the young  and low skilled workers of the opportunity to gain valuable work experience, creating a cycle of unemployment and underemployment for this demographic.

Market-Driven Wages: A Better Alternative

The beauty of a free-market economy is that it regulates itself through supply and demand. When there is a shortage of workers, businesses must offer more competitive wages to attract the best candidates. Conversely, if there's an excess of workers, the market adjusts accordingly. This natural balance allows for flexibility, fairness, and opportunities for everyone to participate in the workforce according to their skill level and experience.

Rather than a one-size-fits-all policy that ignores market dynamics and places the most vulnerable at greater risk, abolishing the minimum wage would open up job opportunities for the low-educated, minorities, and young workers. By allowing market forces to set wages, we can create a more inclusive, dynamic, and equitable job market for all.

Conclusion

It’s time to reevaluate the long-standing institution of the minimum wage and look at it through the lens of free-market economics. Rather than propping up low-income workers, the minimum wage often serves as a barrier that prevents them from entering or staying in the workforce. By removing this obstacle, we can build a more robust, fair, and economically sustainable society that benefits everyone.