Friday, February 17, 2012

Minimum Wage Leads to No Wage

Buried in this Gallup Survey of Small Business are some fascinating tidbits.  For example, 1 in 20 small businesses plan to retain unpaid interns to do the work.  O! The ramifications!  The wage in these jobs is zero, by definition.

First, there are plenty of employers who would hire people at wages above zero but below minimum wage.  There are plenty of people who work would below minimum wage.  There would probably be no one available to work at zero by the time the market cleared all of the people willing to work for less than minimum wage.

A person working for less than minimum wage is in a position to advance within a company.   The unemployed do not.  Being unemployed makes it more unlikely someone will hire you.

Culinary schools each quarter graduate tens of thousands of chefs who understand that their first job will be unpaid.  The system is called "staging" (pronounced stazhing, I suppose to make it sound exotic, when it is really just unpaid work).  Ostensibly these graduates (owing from thousands to hundreds of thousands in student loans) are learning new techniques and strutting their stuff in restaurants.  They work for a short time (a few months) and move on.  Of course they are working for a meal, they work like dogs, go unpaid all because people need to adjust to the injustice of minimum wage laws.

When forced by stupid laws to pay some people higher than they are worth, then the money has to come out of someone else's pocket.  Another worker, not the owner.  You can say that is unjust, but really it is only the effect of an earlier injustice, taking the right to contract away from free voluntary parties.

Working for free is illegal under the minimum wage law, so they came up with staging to disguise the fact.  With all the interning going on,  strict laws on interning have been written, with serious consequences for violations.

In order to qualify as an unpaid internship, the requirement is simple:  no work can be performed that is of any benefit at all to the company.  

 Does one think 1 in 20 businesses facing economic hardship intend to supervise people who will provide no benefit?  I think not. And as these things go, when the laws were written, they were written to exclude lawyers and politicians.  They are free to have unpaid interns. Of course.

Most small businesses are not hiring because they doubt the economy will rebound, and about half because of govt regulations.  Govt policy assures the economy will not rebound.  Because it will not rebound, we will get more regulations.  The bad USA economy is in a death spiral.  When it crashes, it will be the self employed, small businesses that lead the country back to peace and prosperity.

Starting a new business, unshackled by legacy dead economy malinvestment, is the path to economic health.



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