Thursday, March 22, 2012


Early in this legislative session, New York senators and assemblypeople debated Sheldon Silver’s proposal to increase the minimum wage in New York by $1.25. The argument – whether to maintain the status quo or strive for $8.50 – is wasteful political rhetoric in itself, for the determination of the lowest wages is best left to the free markets, not the government.

The laissez-faire approach would not be without controversy for most people have a misguided concept of employment, perceiving it to be a right and not a privilege. They fail to understand that it is a very basic economic transaction. It is no different than making a purchase at a grocery store. It’s a trade — one where the worker willingly gives to his employer, in exchange for compensation, the use of his physical and mental services. As with any economic activity, either party can prevent ongoing transactions, whether such termination is based in dissatisfaction with the exchange, or the influence of supply and demand in the micro- and macro-markets.

Those factors pit employer against employer in an openly free market when it comes to the acquisition of satisfactory or superior human talent. To be successful in the labor market, just as it would need to be in the marketplace for its goods and services, the business must offer to its target a package that makes it attractive to that party. In this case, the target is the worker and, if it hopes to secure a good workforce, the employer must offer a wage rate and benefits package that makes them competitive within their region or sector (manufacturing, health care, retail, etc).

Over time, competition collectively creates higher wages because all employers must provide the average or best in order to be successful at the next level of the economic equation -- the end product. If a business does not pay a wage that is commensurate with work or that offered by similar, neighboring employers, the end product (goods or services) will suffer because the employees acquired at the lower wages may be the labor pool’s outliers of suspect ethic or low adaptability who were unemployable – or not sustainably employable - in other businesses or, reflecting the power of lower wages, they may be souls who are unmotivated to excel in their duties. Such workers have the potential to put out poor quality and subsequently harm the health of that business by forcing away customers dissatisfied with their purchase. An open economy would prevent that – or suffer the consequences - by choosing its own minimum wage.

That scenario shows capitalism is founded in Darwinistic principals by which only the strong survive (and that’s why it’s far and away the very best economic system ever created). But, for some industries that survival instinct is given a crutch by the minimum wage, something counterintuitive to the foundation of the minimum wage. Many employers in low-return, low-cost sectors (like fast food or packing) have no reason to compete at the labor level and better their offerings to existing and prospective employees because they know exactly what their competitors are paying ($7.25/hour). In essence, the minimum wage acts as a disincentive to higher wages because it gives them a sense of certainty and a comfort level that keeps whole industries at or near the bottom salary.

Likewise, there are workers who use the minimum wage as a crutch, too. They know that the minimum wage will provide a basic level of income and they don’t have to entertain the competitive nature of employment by seeking higher wages elsewhere. As long as the state or the federal government guarantee them a steady - and often growing – income level with minimal betterment of self or the attempted attainment of a better job with greater responsibility and earnings, they’ll skate by on the government’s forced benevolence. Take away the crutch and they’ll be forced to improve themselves.

Simply put, the minimum wage is destructive to the economy in the long-term by eliminating competition from the acquisition of employment by workers and the businesses that pay them. It ultimately creates an overall lower wage by cancelling out the productive nature of capitalism that forces all participants to be the best they can be. If companies were left to do their own thing – and whole classes of the workforce where properly motivated - one can rightly assume the actual minimum wage would exceed the government’s $7.25 standard.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at


This column originally ran in the 26 March 2012 Greater Niagara Newspapers

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