We Don’t Need a Higher Minimum Wage; We Need to Fix Our Money
You’ve almost certainly heard about the “fight for $15” movement to increase the minimum wage. Well, some activists have upped the ante. How does “Fight for $20” strike you?
Here’s the problem, these people are trying to solve a legitimate problem with a really bad solution.
Last year, Rep. Rashida Tlaib (D-Mich.) called for a $20 national minimum wage. And why not? If $15 is good, wouldn’t $2o be better? In fact, why not go for $30 an hour. Or $100? If you can just arbitrarily assign a number to wages without consequences, why not go really big?
This reveals the problem with progressive thinking on wages. They know at some level you can’t force wages to infinity. But they have no actual economic principle upon which to peg their policy. They just throw out arbitrary numbers based on political considerations and feelings. If Bernie is going to run on $15 an hour, Tlaib can one-up him by pushing for $20. Somebody else can come off as even more compassionate by demanding $25.
The problem with all of this political posturing is it eventually drives actual policy. We’re already seeing moves for a $20 an hour minimum wage. The Aurora County, Colorado, City Council recently shot down a plan to raise the city’s minimum wage to $20 by 2027. But it’s only a matter of time before someplace approves this nonsense.
And no matter how compassionate it may seem, these policies have horrible economic consequences. In the end, basic economics always wins.
There’s an even bigger problem underlying all this. We don’t have a wage problem. We have a money problem.
Minimum wage advocates seek to solve a legitimate problem facing American workers: their dollars buy less and less every year. But simply mandating employers fork over more dollars is a little like putting a band-aid on an amputation. It doesn’t do anything to address the underlying problem.
Our money is broken, and we need to fix it.
The US government’s monetary policy devalues our currency, and that means less purchasing power for you and me. Simply put, when the government debases the currency; a dollar no longer buys the same amount of stuff it once did. Quantitative easing devalues the currency and the Federal Reserve has engaged in the practice for years. And they have put it on hyperdrive in response to the coronavirus pandemic.
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So, what does this have to do with wages? Well, consider this: in 1964, the minimum wage stood at $1.25. To put it another way, a minimum wage worker earned five silver quarters for every hour worked. Today, you can’t even buy a cup of coffee with those five quarters.
But the silver melt-value of those five quarters today stands at over $20.
There’s your $20 per hour minimum wage.
This vividly illustrates currency debasement. In terms of purchasing power, the value of the silver remains relatively stable, but the value of a dollar shrinks. The long-term rise in the price of silver reflects this reality. It’s the very reason people buy silver and buy gold.
Now flip things around. Today, it takes 60 quarters to pay a $15 minimum wage. If you paid that in 1964 silver quarters, the value of the metal would be something in the neighborhood of $250!
This demonstrates why precious metals are good investments. Silver and gold retain their value as paper currencies continue to debase – thus raising prices over the long-term.
In an economy with stable money, prices tend to fall, not rise. That means more purchasing power to the poor, minimum wage workers, those on fixed incomes, and savers. But the government currently debases our currency. The politicians and central bankers claim their policies stabilize economies and protect the people from currency debasement. But in truth, these policies only enrich the politically well-connected at the expense of you and me.
Minimum wage hikes only mask the problem. We need to fix the money.