The Minimum Wage Exploits the 99 Percent, While Protecting the 1 Percent

President Obama's push to impose a $10.10 minimum wage on employers has generated all manner of commentary about the implications of such a rule. Most has focused on how many or how few jobs will be lost thanks to legislation of this kind.

About the potential job loss, to pile on about it would be to shoot fish in the densest of barrels. Labor is a cost like any other, so any mandated wage will surely render some unemployable.

Where the right get it comically wrong is in their commentary about how minimum wages will force automation on companies as though this is a bad thing. No, it's something we should embrace. Counterintuitive as it may seem, economic growth is all about the destruction of work - doing more with less labor inputs - on the way to higher profits.

The best way to create jobs is to actively destroy them owing to the tautology that our wants are unlimited. Because they are, any profit-boosting automation of production happily frees up capital that can be invested in new, job-creating ideas.

The internet itself has been a prodigious job destroyer, but the "loss" of jobs due to the internet has led to the creation of many, many more. Jobs are a function of investment in search of profit, and as the internet has allowed companies to slim the use of labor in certain areas, the profits have once again allowed for capital to be directed to more profitable uses.

Thinking about the minimum wage in a more broad sense, it's by definition superfluous as a driver of worker prosperity. That is so given the logical truth that businesses in a free market economy have no incentive to exploit their employees. Economists and commentators will bring up oddities like the capital/labor ratio and other notions that members of the fraudulent economics profession think about, but none have relevance in the real world.

To see why, it's useful to address one of the great all-time urban myths; this one suggesting that Henry Ford paid his employees a high wage in order to get them to buy Ford cars. If it's stated up front that there weren't enough Ford employees to clear the company's substantial inventory, thus rendering the myth laughable on its face, we can then cover the real reason that Ford was so "generous" toward his workers.

At risk of offending some readers, Ford's love of profits rendered him quite benevolent. Worker turnover is very expensive for any business, and as Ford's profits were hurt by annual turnover in the 300% range, Ford self-interestedly gave his workers raises so that they wouldn't leave him.

We see much the same today. Google's Googleplex is a monument to self-interested management doing everything possible to make Google attractive to workers, any visit to Nike's campus in Beaverton reveals a similarly lavish setting for employees, and then for those who say businesses only take care of high-end workers, we can point to Starbucks. Eager to keep turnover low, Starbucks has historically offered its baristas health insurance, and this benefit has proven a competitive advantage in the fight for limited labor.

So while it's fashionable to assume greedy businesses force low wages on their hapless work forces, observable realities remind us that the best, most successful, and most profitable businesses invariably pay their employees very well in terms of pay and perks. It's too expensive for quality workers to regularly be jumping ship. In short, the minimum wage is superfluous when it comes to helping the skilled, and to some degree the semi-skilled.

Importantly, this doesn't tell the full story. The minimum wage does have an impact, and not surprisingly the impact of this allegedly compassionate sort of legislation falls most cruelly on its intended beneficiaries: unskilled workers. "Compassionate" legislation is often harsh, and the minimum wage reveals why.

A wage floor serves as a barrier to the hiring of the unskilled, and because it does, it's quite mean-spirited. Some people quite simply lack the skills to merit any pay at all, so when the federal government mandates pay, it prices those most in need of experience that would eventually rate a paycheck out of work altogether.

In my own case, I started writing for the public in 2003. My first column was for National Review Online, and it was for free. At present I'm able to earn a living as a writer, but if federal rules had forced National Review to pay me almost eleven years ago, I would be doing something else today. High wages are often a function of experience, and if National Review hadn't been able to "exploit" me, I most likely wouldn't be in media at all.

Fox News anchor Megyn Kelly famously worked for ABC News for free. Some would call this exploitation, but the happier truth is that the experience she gained working for nothing led to a high-quality audition tape such that Kelly is very well-paid today. In short, the dirty little secret about wage floors and minimum wages is not that they drive the profits of the 1 percent, but that they instead protect the jobs of the 1 percent.

This isn't only true in media. Walmart can claim top executives who first worked on the floor for the retail giant. Misguided lefties bemoan the low pay of entry-level Walmart work, but absent the ability of the Bentonville, AR company to start workers at the bottom, those same workers would never be able to acquire the experience necessary to rise into the executive suite.

What we must remember is that for the skilled among us, wage floors will never hold much relevance. Successful businesses go to great lengths to keep the skilled around with high pay and exciting perks. But for the unskilled on all levels, any kind of minimum wage is rather mean. Indeed, sometimes we need to be exploited so that we can eventually "exploit" our employers.