A minimum wage is pro-business

I saw two ire raising online posts a few days ago about the minimum wage. One primarily made the disingenuous argument that workers should be paid according to their productivity and (out of concern for low wage workers) that any [low] wage is greater than no wage. The problem with this position is the onus of productivity is placed completely on the workers as if managers and business owners have no control over production.

I look at the minimum wage from a completely different perspective. By setting a minimum wage, the government expects that all businesses operating within its jurisdiction do so with sufficient efficiency to ensure their employees are able to earn some preset minimum wage. The effect is twofold: assurance that the standard of living does not slip below some minimum and promotion of profitable business practices, that is, demands all businesses have a good business plan. Business owners and entrepreneurs are still free to pay themselves as they see fit.

The second post added, on top of the above argument, a  hypothetical: employee wages absorb all the business profits so owners cannot use their profits to expand into another location. Since the expansion of low wage work does not build healthy economies, I propose a different narrative… what if some of these ‘profit pilfering’ employees save enough of their wages to start their own business (or support their children’s education to the same effect). These novice entrepreneurs would seek out unmet niches in the market, thus increase the diversity of local enterprises. And municipalities with diverse business bases are better buffered against market forces and more capable of responding to changes in supplier, manufacturer and consumer demands. All good reasons to improve worker wages.

P.S. Service work does not have to be low wage. Here are two examples of successful service worker heavy business plans in operation (see here and here).