This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Minimum Wage Is a Law Against Workers

Unfortunately for entry-level job seekers, a minimum wage also results in foreigners competing for jobs right here at home. We live in a connected world and the higher the minimum wage, the more incentive illegal immigrants have to enter our labor pool. It's a one-two punch that helps explain why low-skill unemployment is higher than it should be.

Placing limitations on workers and what they are allowed to charge may have justification if at the end of the day a minimum wage actually helped those earning it. Alas, there is no Santa, and we cannot simply wish for a magical wealth gift to arrive in a pretty package. The additional above market wages cost to business is passed on in the prices charged. The net result is higher costs for everything from rent, food, electronics, and even lawn care service. We can loosely measure it through the McDonald's (MCD) Big Mac index.

It costs much less to buy a Big Mac in Hong Kong and Singapore compared to New York City. Comparable wages are lower in Hong Kong and Singapore, but so are relative costs of living. It should be obvious to all, including the Walmart (WMT) and McDonald's protestors that if retail employees are forced to charge more for their services, the costs will get passed on in the form of higher prices and or lower customer service.

The point is, all perceived gains from increasing the minimum wage are lost through increases in living expenses. Additionally, a whole host of unintended consequences are introduced. Hidden costs including increased border and immigration compliance costs, a lower standard of living for most wage earners paying higher prices while still having to compete in a global environment, higher unemployment compensation costs, and employee skillsets moving to other countries.

I can fully appreciate people wanting to help others, and so do I. The best way to accomplish a higher standard of living is to allow the free market to work its magnificent, not-so-invisible-hand magic that has lifted more people out of poverty than any other form of capital allocation and control. Central planning destroys wealth and jobs and is the last thing a low skilled worker needs if they want to improve their lot in life.

At the time of publication the author had no position in any of the stocks mentioned.

Follow @RobertWeinstein

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

>>Read more: Memorial Day Travel to Hit Post-Recession High

3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.10 -0.24%
FB $79.46 -1.20%
GOOG $562.67 1.30%
YHOO $44.30 -0.34%
TSLA $204.27 -1.40%

Markets

DOW 18,197.53 -16.89 -0.09%
S&P 500 2,111.07 +0.33 0.02%
NASDAQ 4,985.1210 -2.7690 -0.06%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs