Today, the new federal minimum wage went into effect...and while most would think that's a good thing for workers, in the long run it really isn't.

If fact, I heard two accounts today where businesses were going to have to lay people off, or eliminate positions completely, in order to meet the new federal mandates.

How can that happen?  I thought that raising the minimum wage was supposed to be good for the "little guy". 

The reality is that it's just business.

In any business...especially one that's just squeaking by...having to raise the pay of many low-grade employees with a finite amount of business income means something has to give.  Many are being forced to eliminate a few positions so that they can raise the pay of those affected by the increase.

Apparently, money just doesn't appear out of thin air in the business world...only in government.

And so, yet another government "intervention" intended to make things better for workers ends up having a net negative effect.

I would argue, as many have in the past and present, that if you really want to make things better for the workers at the bottom you need to eliminate the minimum wage completely.

Those in favor of a minimum wage think they are creating a theoretical bottom for wages...when they are actually creating a ceiling.  Instead of employers and employees reaching an agreement on what a person's services or labor are worth, the government is stepping in-between them and setting a price.  And while by law, the wage can't go below the set minimum...you are in effect setting a price at which many jobs will never go above.

You are eliminating competition for those lower wage jobs.  If an employer thinks your labor is only worth $6 an hour you have the choice to not work for him if you think it is worth more.  If he can't find anyone to work for $6, then he'll have to move up in wage until he gets to a point where someone is willing to work.

And if you are a good worker, and you think your labor is worth $8 an hour...a set minimum wage is going to create an inordinate number of jobs below that mark...effectively forcing you to take a job at a lower wage than you may be worth.

A minimum wage simply drags the median wage lower while trying to make it higher.

It's no different than buying a car...or a house...or a hamburger.  The seller has a price at which he is willing to sell...and the buyer has a price at which he is willing to buy.  If they can't agree on a price, they move on to others until they do reach a price both are happy with.

A minimum wage eliminates that natural process.