In early May, following the trend of many U.S. cities, St. Louis raised the minimum wage to $10 from the state minimum of $7.70. The plan was to raise the price of work to $11 by January, and given the national “Fight for $15” campaign, St. Louis was likely on its way to doubling the minimum wage.
The American Legislative Exchange Council, an organization that supports free-market policies, drafted legislation which prevents cities from setting the minimum wage higher than the state level. The Missouri GOP recently passed a law to this effect, which will lower the St. Louis minimum wage back to $7.70 starting August 28.
While Democrats decry the governor’s decision, basic economics tells us that price increases mean fewer sales. When the government sets a minimum wage, the price of hiring employees may increase, but their value to the employer remains the same. If their work isn’t worth $10 an hour, they’ll simply be replaced with self-service machines, or the business will be forced to close its doors. What is the effect in both cases? Fewer jobs.
We see the real-life example of a price floor set above the market price in Seattle, where a minimum wage of $15 isn’t having the effect the government thought it would. According to the Washington Post, “The average low-wage worker in the city lost $125 a month because of the hike.”
The real minimum wage is $0. The government has no place in a voluntary contract between two individuals: an employer and an employee. The minimum wage effectively outlaws jobs, forcing low-skilled individuals or people with special needs out of the workforce.
In a free society, there is no such thing as job security. Individuals must learn new skills and market those skills to each other. While this is by no means easy, the result is more jobs, more highly-skilled individuals, a thriving, innovative economy, and a higher quality of life for everyone. The alternative is the minimum wage: government coercion toward business owners, displacement of low-skilled individuals, and an overall decrease in available jobs.
Missouri has made a step in the right direction.