Should Minimum Wage Be Abolished?

There is an intriguing concept coined by German Economist Horst Siebert known as the ‘Cobra Effect.’ It originates from Colonial India at a time when the British Empire dominated the subcontinent. The city of Delhi had a problem with its large cobra population, so the British came up with a way to rid the city of them: offering a reward for every dead cobra. The good intentions of the British were not enough, however, as smarter locals began mass-breeding cobras for profit. Once the British found out about this, they quickly ended the program. What did the locals do with their now-useless cobras? They set them free, ending with a higher cobra population after the program than before it. This concept of a well-intended solution making a problem worse can be directly applied to the U.S.’ national minimum wage.

Regardless of whether it’s $7.25/hr or $15/hr, the minimum wage has an inherently fundamental flaw: it’s built on an illogical foundation. The argument made incessantly is that workers must be given a living wage, but what exactly is a living wage? I find it hard to believe that $7.25/hr or $15/hr flat are precisely calculated living wages. The United States is extraordinarily vast, stretching across regions as sparsely populated as Nebraska and as industrially developed as Los Angeles as well. It does not make sense that each of the 50 states, all with their own unique markets, resources, industries and populations would be mandated to pay the same minimum rate across the board when $7.25/hr in Carlisle can buy much more than $7.25/hr in a city such as New York. Increasing the national minimum wage and ignoring regional economic factors, even with good intent, is economically illogical.

The more unpopular truth regarding the minimum wage is that labor is a costly resource. Paying workers more is actually incentivized since increased pay generally means increased labor quality, but paying workers more also cuts into profits. Not all small businesses can afford this tradeoff like corporations can, Amazon being a perfect example. The company recently caved to public scrutiny, not legislation, to increase their base pay in the U.S. to $15/hr. Along with this announcement, however, Amazon also stated they will begin advocating for a higher national minimum wage like Walmart has done in the past. Why would these massive corporations, each worth several billions of dollars, advocate for a national hike when they are obviously able to hike their own base wage at any time? I don’t believe it is out of the kindness of their corporate hearts, and neither should you. These corporations are smart and know a minimum wage hike would only hurt small businesses that already struggle to compete with them. Increasing the minimum wage, even with good intent, only serves to strengthen the dominance of corporate America at the expense of small business.

Instead of increasing the minimum wage, let us abolish it. It is a fallacious strawman that America will revert to paying kids 2¢/hr to mine coal until they have black lung. Unions, having been declining for years now, would finally have a reason for workers to join them again. Businesses would have to thoroughly discuss what quality of work they desire at their establishments to avoid public scrutiny and a PR nightmare. 

But, most importantly, the American worker would have much more responsibility. Displaying a higher quality of labor would become a worker’s means of increasing pay, not bigshot politicians in Washington. The 20th century was one of autocracy and corruption. Let’s make the 21st century one of free markets and liberty.