Property Rights and the “Little Guy,” Part 2

In Part 1 of this series, we examined how property rights protect the freedom of the “little guy” to improve his economic status. But when property rights are violated, the opportunities are diminished. The minimum wage is one example.

Suppose an employer could use someone to perform mundane tasks, such as sweeping the floor or collecting trash. If he could pay someone $5 an hour for that job, he would do so. But minimum wage laws prohibit him from doing so. He must pay at lest $7.25 an hour, and in many jurisdictions, he must pay much more. And so, he leaves the job unfilled.

But what if an unskilled individual would gladly accept $5 an hour? He is prohibited from taking the job. He is denied the opportunity to develop job skills that would enable him to earn more in the future.

In many instances, minimum wage laws arbitrarily force employers to pay more than he believes a particular job is worth. And so, the job is never created or is eliminated. The unskilled or low-skilled worker loses an opportunity.

As an example, the city of Seattle raised the minimum wage to $13 an hour over several years. In 2017, it released a study that found:

The numbers of hours worked by low-wage workers fell by *3.5 million hours per quarter*. This was reflected both in thousands of job losses and reductions in hours worked by those who retained their jobs.

In other words, thousands of people lost the opportunity to develop skills that would help them in the future. Undoubtedly, many applauded their government imposed raise—until they lost their job.

For the most part, people working minimum wage jobs do not possess a lot of job skills. If they did, they would find a better paying job. But a better paying job is often difficult to find unless one has experience and certain skills. Sometimes, a low paying job is the path to getting experience and skills. But minimum wages laws make this much more difficult for the “little guy.” Read Part 3 of this series.