On Taxes

Taxes are not something most people joyfully or gleefully pay. They are not something that most people claim to benefit from. But people defend taxation for various reasons; they are voluntary or compulsory. Taxes are what some describe as the cost of living in a certain area or to enjoy certain services that this money is supposedly collected for. And then some say all taxation is theft.  Apologists will denounce anyone who dares to "cheat" the system and keep some of their own money. They are a guilty pleasure and an unseen control mechanism to a lot of people.

Tax Time is here and not too many smiles will be found, unless you work for the Government that is...

Individuals and companies, from the last day of January to the 15th of April every year, sit down to try and figure out how much of their money has been taken by the Federal Government and if they can expect some of it back or if they will be forced to "give" some more. The Federal Income Tax has been enforced since 1913 and ever since that time people living in this country have been required to pay part of their wages to support government programs and fund Federal Institutions. Trillions of dollars are taken from the paychecks of citizens before they ever see it.

Why are you defending theft?

There is a saying "Taxation is Theft". Some believe this is an error and that the statement is false in all degrees. But is it? Is taxation theft? The legal definition of theft is the generic term for all crimes in which a person intentionally and fraudulently takes personal property of another without permission or consent and with the intent to convert it to the taker's use (including potential sale). With that said, one can question if the pay of a man for his labor is his property of that of the government for which he lives under. Questions can arise if the man has voluntarily submitted himself and his wages to the seizure of his property or if under the definition of theft has been the victim of a crime. Since those persons outside of government employment are in the private sector and those persons have not submitted the wages of their labor voluntarily, but by threat of violence or imprisonment the definition of theft can be applied to the act of taxation of income.

"If, then, taxation is compulsory, and is therefore indistinguishable from theft, it follows that the State, which subsists on taxation, is a vast criminal organization far more formidable and successful than any “private” Mafia in history". -Murray Rothbard-

Those that are in Employment of the government, in whatever capacity and at whatever level, (federal, state or local) are the beneficiaries of these extorted monies as their paycheck.

It has been said that these government workers "pay their own wages because they are taxed also". This is a fallacy. As a person is taxed at a percentage of their income, a person cannot pay into their entire paycheck. If they paid the entirety of their own wages it would be known as volunteering or slavery.

Oliver Wendell Holmes Jr., American Jurist and Associate Justice of the Supreme Court of the United States from 1902 to 1932 is quoted as saying, "Taxes are the price we pay for a civilized society." This is a popular thought of those who I would say taxation is a guilty pleasure or who feels that their wants should be funded by public means extorted from individuals instead of private and voluntary contributions. The very nature of this statement brings to mind a incredibly different question altogether for me. "Do we have a civilized society?"  That is a question left for another time.

A society based on the theft of wealth cannot be a moral and civil society. The very action of theft is against civility. But in this thought, we can ask ourselves these questions.

Does the act of paying into a general fund benefit the individual outright as much as it would if he would have funded whatever it is by voluntary means?

Can the value of these institutions to the general public be in contest to the value by the individual?

If a man be forced to fund policies and departments that they find immoral, unneeded, or in conflict with their religious or philosophical beliefs.

Murray Rothbard writes in his work "The Ethics of Liberty" that the size of government can be directly affected by the coercive nature of taxation. If the State were to suddenly abolish all taxation and thereby fund their departments and programs through completely voluntary means the size and scope of government would dramatically shrink.

This should be and is touted as the goal of the Neo-Conservatives and Republican Party,but is in complete contrast to their actions and policies. The same can apply to Democrats and Neo-Liberals, as their policies and actions tend to be based more on helping people, excessive taxation steals the money from people they are attempting to help.  It robs businesses of capital and forces higher prices, unemployment and subsequent poverty.

Where does all of this money go?

The mainstream belief is that these monies go to pay for services and programs inside and outside the United States. That would be nice, IF IT WERE TRUE. What is not taught to most Americans is that all the money that is taken in the form of the Federal Income Tax is used to pay off a loan for the previous fiscal year’s budgets. Who is this loan from?  The Federal Reserve loans the US government money at an interest rate. They then sell this debt (or securities) to foreign and domestic banks and individuals. The US Government pays these notes of security to the holders upon payment to the Federal Reserve of its loan. Of course the Federal Reserve does not pay the interest earned to the holders of the securities and instead makes a profit from the transactions. Interesting that a private bank that holds an enforced monopoly on the issuance of money is turning large profits off of the debt of a nation.

You might be wondering why the US debt has skyrocketed in the past and why it is so astronomical now; that is the nature of the Federal Reserve System. Since all money the government, and by mandate of the rest of the country, uses is owed back to the Fed with added interest; and the only way to pay it back is to take out a loan the next year, it is inevitable that this debt is unpayable. For a better explanation, I would recommend the book The Creature From Jekyll Island by G. Edward Griffin.

Is it cheating to keep your own money?

There are Tax Apologists out there that will become irate when an individual or company is found out to have offshore or international banking accounts in order to skirt paying taxes. The idea that someone who finds a way to keep his or her own property from seizure is seen as a criminal or seen as the bad guy has never really made sense. It is the same as someone who sets an alarm on their car or home: they are protecting their property and assets. The keeping of their own wages or property is the essential goal of Tax abolitionists which is to free everyone of the burden of theft of wages. It’s baffling to think that anyone is against this, but I think the emotional and illogical thought people have is, " If I have to pay then so does everyone else." i.e. the fair tax. To be certain there is nothing fair about the Fair Tax, it is still funneling money away from commerce and savings and it still only applies to certain groups and individuals.

The Fair Tax advocates will debate all day long that their system is better than what we have now, and I will not disagree, however I will say this: it is far from an ideal way to handle things. The entire idea of collecting money to fund programs and departments that the original "victim" may not have voluntarily given to is still present. The idea that money is still being diverted away from private enterprise and given to a bloated, inefficient and expanding government hasn’t changed. The same idea that Rothbard stated is still there: if the department or program cannot be funded by voluntary means it should not be fit to survive on public funding. Much like private business, if customers do not value the product or service, the company will fail and cease to exist. In the opposite of public departments and government offices, there is no measuring stick or ruler to determine if the service is viable beyond the edicts of bureaucrats and politicians wants.

To name a few things that tax monies are used for that would most likely not be funded by voluntary means.

The NSA and its wiretapping programs- Seen as a violation of privacy by a majority, this office and its "service" most likely would fall.

Animal Shelters that euthanize animals- This is a partial subsidy most often and the shelter may or may not survive with voluntary contributions.

The Militarization of America's Police forces and the brutality that they commit on a daily basis-If these police departments were reliant on the surrounding communities support and contributions there would be less of a chance they would commit the heinous acts that they do. Killing family pets and even people are becoming everyday occurrences in America. Changing the way they are funded could force them to rely on community service and protection services without the God Complexes a lot of them have.

Calling on more taxation.

There is a growing movement in America, an added Tax movement. The Robin Hood Tax or The Wall Street Tax is the next big thing for gluttons for monetary punishment. This new tax would add tax onto Wall Street transactions. If any sane individual thinks that this would not have a detrimental effect on the Stock Market, they are gullible and economically ignorant. Any addition to transactions coming from Wall Street would hamper the degree and volume of daily transactions. This would have a negative impact on the formation and expansion of companies and corporations as they will stifle new markets and products. These new taxes, like all others, will be passed to the end consumers, YOU AND I. When a new tax or regulation is added to a transaction of a corporation, the owners of that company will want to reduce any interference in their ability to turn profits (after all everyone is after a profit). That is the reason most of us have jobs; to profit off of our skills and labor. The owners will pass their cost of compliance to regulation or the collection of new taxes down the line until it hits the product on the shelf where the end user, the consumer, picks up the higher price.

As an Anarcho-Capitalist, I understand that this is hard for some to understand and takes much more than a simple blog post by a relative unknown person for many to grasp the concepts I have laid out here. That is why I encourage further reading into the failure and immorality of taxation.  The works of Ludwig von Mises, Murray N Rothbard, Lew Rockwell and so many more are easily found online. Take the time and educate yourself. Learn and apply, it really is that easy.


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Minimum Wage Law

The Minimum Wage hurts both businesses and workers alike in that it takes away the right of them both to come to mutually beneficial terms of employment. Below is a recent conversation I had with the Manager of a local grocery chain. As I explain how the minimum wage laws hurt the contracts between company and workers, it also fails to allow services to be rendered at a rate of agreement and forces businesses to comply with rules and laws, mandates and edicts of government agencies that are not present at the time or place. 

Me: Hello I wanted to find out if you were hiring at the moment.
Store Manager (SM): We take applications and fill spots according to the need.
Me: Great, I noticed the parking lot was full of shopping carts and wanted to offer my services for retrieving those carts. I assure you my rate would be sufficient and according to the skills involved.
SM:Your rate?
Me: Yes sir you see I would willingly accept $4 per hour until the job was complete or until a specified time had passed, your decision,
SM: Oh no we cannot do that, that is well below the Minimum Wage set by law, I am sorry but there is no way.
Me: Would you deny me to make any wage simply on an edict of a federal and state agency that is not present at this time or place?
SM: Sir, there is nothing I can do, they set the rate at which I am supposed to pay employees.
Me: And is that fair to either you or the employee? I ask, if I were to say that $4 per hour is what it would cost to have my services, which are needed by the state of your parking lot, and that wage would sufficiently support myself, why then would you deny me a chance to use my skills to earn a wage simply on the arbitrary and unfair rule that takes away the right of companies and employees to come to mutually beneficial terms of employment?
SM: It may not be fair but that is the law and this company will not skirt the law in order to hire cheaper labor.
Me: The company willingly gives away it's right to mutually beneficial terms of employment contracts on the will of a government office that is not present, leaving customers swerving to miss your shopping carts, and then you can deny a man who offers services to help not only you but your customers the ability to earn a wage that is fair and agreeable?
SM: Sir, I am sorry I cannot help you in your search for temporary employment, rules and laws are there for the protection of the people...
Me: Excuse me sir but how then is the minimum wage law helping either me or you in this instance?
SM: Well it isn't in this instance but what you are asking is not normal, a low wage for work is almost unheard of.
Me; I assure you my decision on that number is equal to the amount of skill I have in the matter compared to the time it would take to do the job and given the need for the service the wage seems more than fair, wouldn't you agree?
SM: Well yes but that isn't the point, the point is that we cannot have you on the books at that wage...
Me: Fantastic, I will work for cash money, that would insure neither the company nor I would have to pay taxes on that money, what a fantastic idea.
SM: Sir, No we cannot do that.
Me: Why not, it was your idea. Let me be completely honest, I didn't come in here to bother you with all of this, I just wanted to see how the common company would refuse a person a wage on the edicts of a government agency, against the better judgement and benefits of both parties. I thank you for your time. Good afternoon.
SM: Good afternoon to you as well.

INVADE THE WORLD By Murray N. Rothbard

When Communism and the Soviet Union collapsed several years ago, it seemed evident that a massive reevaluation of American foreign policy had to get under way. For the duration of the Cold War, U.S. foreign policy was simply a bipartisan interventionist crusade against the Soviet Union, and the only differences were precisely how far the global intervention should go.

But when the Soviet Union fell apart, a rethinking seemed absolutely necessary, since what could form the basis of U.S. policy now? But among the intellectual pundits and elites, the molders of U.S. and even world opinion, virtually no rethinking has occurred at all. Except for Pat Buchanan and us paleos, U.S. foreign policy had proceeded as usual, as if the Cold War collapse never happened. How? Buchanan and the "neo-isolationists" urged that American intervention be guided strictly by American national interest. But the liberal/neocon alliance, now tighter than ever before (now that Soviet Communism, which the neocons were harder on, has disappeared), pretended to agree, and then simply and cunningly redefined "national interest" to cover every ill, every grievance, under the sun. Is someone starving somewhere, however remote from our borders? That's a problem for our national interest. Is someone or some group killing some other group anywhere in the world? That's our national interest. Is some government not a "democracy" as defined by our liberal-neocon elites? That challenges our national interest. Is someone committing Hate Thought anywhere on the globe? That has to be solved in our national interest.

And so every grievance everywhere constitutes our national interest, and it becomes the obligation of good old Uncle Sam, as the Only Remaining Superpower and the world's designated Mr. Fixit, to solve each and every one of these problems. For "we cannot stand idly by" while anyone anywhere starves, hits someone over the head, is undemocratic, or commits a Hate Crime.

It should be clear that there is now virtually no foreign policy distinction between the liberals and the neocons, the Tony Lewises and Bill Safires, Commentary and the Washington Post. Wherever the problem is, the liberal-neocon pundits and laptop bombardiers are all invariably whooping it up for U.S. intervention, for outright war, or for the slippery-slope favorite of "sanctions." Sanctions, the step-by-step escalation of intervention, is a favorite policy of the warmongers. Calling for immediate bombing or invading of Country X as soon as a grievance starts would seem excessive and even nutty to most Americans, who don't feel the same sense of deep commitment to the U.S.A. as Global Problem-Solver as do the pundits and elites. And sanctions can temporarily slake the thirst for belligerence. And so it's sanctions: starving the villains, cutting off transportation, trade, confiscating their property in terms of financial assets, and finally, when that doesn't work, bombing, sending troops, etc. Troops are usually sent first as purely "humanitarian" missionaries, to safeguard the "humane" aid of the UN "peacekeepers." But in short order, the benighted natives, irrationally turning against all this help and altruism, begin shooting at their beloved helpers, and the fat is in the fire, and the U.S. must face the prospects of sending troops who are ordered to shoot to kill.

In recent weeks, in addition to humanitarian troops, there had been escalating talk of American "sanctions": against North Korea of course, but also against Japan (for not buying more U.S. exports), against Haiti, against the Bosnian Serbs (always referred to as the "self-styled" Republic of Srpska, – this in contrast to all other governments "styled" by others?). Jesse Jackson wants the U.S. to invade Nigeria pronto, and now we have Senators Kerry (D., Mass.) calling for sanctions against our ancient foe, Canada, for not welcoming New England fishermen in its waters.

OK, the time has come to get tough and to get consistent. Sanctions are simply the coward's and the babbler's halfway house to war. We must face the fact that there is not a single country in the world that measures up to the lofty moral and social standards that are the hallmark of the U.S.A.: even Canada is delinquent and deserves a whiff of grape. There is not a single country in the world which, like the U.S., reeks of democracy and "human rights," and is free of crime and murder and hate thoughts and undemocratic deeds. Very few other countries are as Politically Correct as the U.S., or have the wit to impose a massively statist program in the name of "freedom," "free trade," "multiculturalism," and "expanding democracy."

And so, since no other countries shape up to U.S. standards in a world of Sole Superpower they must be severely chastised by the U.S., I make a Modest Proposal for the only possible consistent and coherent foreign policy: the U.S. must, very soon, Invade the Entire World! Sanctions are peanuts; we must invade every country in the world, perhaps softening them up beforehand with a wonderful high-tech missile bombing show courtesy of CNN.

But how will we Look in the Eyes of World Opinion if we invade the world? Not to worry; we can always get the cover of our kept stooges in the UN, NATO, or whatever. Boutros Boutros-Ghali, who is already reneging on his agreement to run for only one term as UN secretary-general, is perfect for the job; no more power-hungry UN official has ever existed. But what about the Security Council? That's OK, because we can always buy off the abstention of China or whoever for a few billion. No problem.

And then the whole world will subsist under the U.S. and UN flags, happy, protected, free of crime and poverty and hate. What could be more inspiring?

A few isolationist, narrow-minded, selfish, callous, and probably anti-Semitic gripers, however, are bound to complain. They like to talk about various "lessons," for example, Somalia. They like to say: well sure we can get in and "win" easily, but how do we get out? In order to fix up democracy, genocide, poverty, hate, etc., we the United States, must create the country's infrastructure, set up and train its entire army and police (preferably in the U.S.). We must teach the benighted country about freedom and free elections, create its two Respectable political parties, and begin with a massive multi-billion dollar aid program to make everyone healthy, wealthy, and wise, provide an educational program (replete with dropping huge bags of food by plane so CNN can do handsprings – even if some of the "helped" are killed by the bags), outlaw smoking and junk food, and feed them all with tofu and organically grown mangoes.

But what about the Getting Out Party? What about our universal experience that when U.S. troops get out, the whole aid, infrastructure, etc. go down the drain? The solution is simple, though it has been far overlooked because some narrow-minded selfish fascist stick-in-the-muds will raise a fuss. The solution: We Don't Get Out! Ever. So we don't have to worry about preparing the natives for transition. We should stay in there and cheerfully Run the World. Permanently for the good of all. A Paradise on Earth. We can call it, the "politics of meaning."

But how will we have the manpower to do the job of occupying? Don't worry about it. In the first place, we can have a 20-million man and woman army, suitably gayized and feminized and Politically Corrected, marching in there with food packages, medicines and hypodermics in one hand, and guns and condoms clutched in the other. We've got plenty of manpower options; we could bring back the draft, we could restore the Peace Corps, and/or we can set up a huge Buckley-Clinton type National Service program, where kids "pay back society" by spending two healthful, fun-filled maturing years setting up infrastructure in Zaire or Haiti or North Korea. With this program, the kids could "pay back" the Earth. What? You say that some of our kids might pick up diseases or get shot along the way? Well, that's OK, because, as they say these days, every failure is a "learning experience."

And then, of course, the U.S.A. will only provide the backbone of the permanent forces of World Occupiers. The rest of the slots will be filled by troops from every other world country, headed by the UN, NATO, etc., providing equally healthful and joyful experiences for other occupiers: Zairians, Ukrainians, Vietnamese, etc. To see Vietnamese troops, for example, occupying Holland, would provide instructive and globally democratic lessons in multiculturalism and mutual love of all peoples. The hardcore narrow-minded will of course have to be dealt with severely, but I am confident that massive educational programs, orientation courses, teachers, books and pamphlets, etc. will change the common climate of ethnic hate to love and understanding. In addition to teachers, hateful and undemocratic attitudes will be stamped out by a legion of shrinks, therapists counselors, etc.

How will all this be financed? Every nation will, of course, contribute its "fair share" of expenses, but since the U.S.A. is the world's Only Superpower, we must face the fact that the U.S. will have to be paying the lion's share – maybe 80 or 90 percent – of the program.

And of course there are always narrow-minded, backward, selfish dogmatists, who will balk at this program, and claim that it is too "costly." There are always a few rotters who know the price of everything and the value of nothing. But again: not to worry. There will be a massive transpartisan educational effort, from all parts of the spectrum, from the Clintonian or Jacksonian left to the dozens of self-proclaimed "free-market" think-tanks, who, suitably financed by government and by corporate elites, will pour forth tomes instructing us that the program will "pay for itself," that it is in the best tradition of the Free Market and Democracy; that these expenses are not really costly because they constitute "investment in human capital" and will therefore save the taxpayers money in the long run, etc. Thus, clearing up all the hookworm in the world will so reduce medical costs that we will all be paying less money. Eventually.

Any residue of complaint, any who survive this educational effort – and let's face it, there are a few rotten apples in every barrel – will be sent to "educational retraining centers," where their objections will be put to rest, and, after a few healthful years in these camps, chopping logs and reading the collected works of left, liberal, neocon and Pragmatic Libertarian pundits, I am sure that they will emerge, happily adjusted to the Brave New Global Democracy of tomorrow.

The above presents the consistent implications of our persistent policy of intervention, and it outlines the system toward which this country has been tending.

The question is: How do we derail this trend? How do we Take it Out? How do we prevent "1984"? Unfortunately, the Republican Party, while significantly better than the Democrats on domestic policy, has been, if anything, worse and more interventionist on foreign affairs. Note the Republican take on Slick Willie: they accuse him of bumbling, evasion, continual changes of line (all true), but except on Haiti, they don't really oppose intervention per se. Sure, it would be nice to have a clear-cut, consistent foreign policy, but clear-cut in what direction? A clear-cut Enemy is not exactly an unmixed blessing.

Meanwhile, things are far from hopeless. There is both an anti-war and paleo-grassroots ferment in this country that is heartwarming. There are all sorts of manifestations: Conservative Citizens Councils, county militia movements, sheriffs who refuse to enforce the Brady Bill, rightist radio talk show hosts, lack of enthusiasm for American troops getting killed in Somalia or Haiti, a Buchananite movement, and increasingly good sense on this question from syndicated columnist Robert Novak. Meantime, the least we at Triple R can do is accelerate the Climate of Hate in America, and hope for the best.

September 1994

Government Seizures Part 1

Did you hear the story of the family who found gold coins worth millions of dollars? Now the government wants their “Fair Share” of it in new taxes, at the top rate no less. This brought to mind the countless ways federal and state government seizes property never belonging to them. From real estate properties, gold and currency, even people, the Government makes it common practice to take what they want and what THEY deem their just deserves. This will be part 1 in a 3 part series on government seizures.

What You Weren't Told About The Minimum Wage by Skyler Lehto.

I came across this Video by Skyler Lehto on his YouTube channel. It raises what I believe to be the greatest argument against any artificial raise in minimum wages in the United States. Transcribed under this video is the complete text. 

Last year, President Obama proposed a hike in the federal minimum wage from $7.25 to $9.00 an hour. After the predictable failure of his proposal, Obama and his party have returned with the Harkin/Miller proposal to raise the minimum wage to $10.10 an hour. What I’m going to do in this video is make several points to confront the myths and address the reality behind the minimum wage. 

Point #1 

Elizabeth Warren’s assertion about a $22-an-hour productivity-adjusted minimum wage is highly misleading. 
First of all, the fact that the minimum wage has fallen behind in value does not mean that the jobs themselves have been held back just as much. In fact, over the past 34 years for which the BLS has maintained this data, the percentage of jobs paying at or below minimum wage has fallen precipitously. So the fact that the minimum wage is lower does not necessarily mean that most low-end workers are worse off for it. What’s more, the federal minimum wage law in 1960 did not apply to as many sectors of the economy as it does today, so Warren’s comparison is not entirely commensurable. Second, her suggestion overlooks a very crucial distinction between average productivity and marginal productivity. Not only did she cherry pick one of the highest estimates of productivity growth, but the statistic that Warren uses is based on an aggregate measure of productivity growth for the whole economy. However, we have to recognize that different jobs have changed in marginal productivity by vastly different amounts. Given the changes in technology and composition of the economy since 1960, some types of jobs have grown tremendously in productivity, whereas others have not grown nearly as much. Economists refer to this phenomenon as skill-biased technological change. As Christopher Wheeler notes in his 2005 St. Louis Fed study, increased wage dispersion since 1983 is significantly correlated with the increased relevance of college education and occupational computer use. Long story short, if we want more workers to earn $22 an hour, it requires getting more people the skills to actually take on these higher productivity jobs. 

Point #2 

The minimum wage is not a big stimulus to the economy. Many proponents of a higher minimum wage argue that giving workers more money to spend will set off a virtuous cycle leading to more jobs and more economic growth. Putting the transient nature of Keynesianism aside, the quantitative effect of a minimum wage increase on spending is actually quite trivial, because only a small portion of workers earn at or near the minimum wage, and much of their increased spending would come at the expense of others. As Obama's former chief economist Christina Romer writes, “the income increase from the higher minimum wage would be about $50 billion. Even assuming all of that higher income was redistributed from the wealthiest families, the difference in spending behavior is likely to translate into only an additional $10-20 billion in consumer purchases. That’s not much in a $15 trillion economy.” Now granted, that was in consideration of the $9.00 minimum wage proposal. But even if the minimum wage hike boosted total spending by as much as $40 billion, that would still amount to less than one quarter of one percent of GDP, which isn't much to get excited about.

Point #3

Australia’s minimum wage is not $16 an hour in US terms. People who make this claim are not doing the currency conversion properly. The exchange rate between two currencies in the foreign exchange market does not necessarily reflect what the currencies are valued at domestically. The nominal exchange rate is often skewed from the real exchange rate due to various factors, such as taxes on imports and exports, or international financial flows that favor one currency over another. Making an accurate price comparison between two countries requires taking account for something called purchasing power parity. Doing this, we discover that Australia’s minimum wage is actually $10.51 in US terms. While that is measurably higher than the US, it’s a far cry from the $16 an hour that many have suggested, and it doesn't come without its share of unintended consequences. Along these lines, people will also occasionally cite higher minimum wages in Canada. But applying the same process to Canada using Ontario’s minimum wage results in a figure of only $8.03 in US terms. 

Point #4

The minimum wage does little to reduce poverty. Supporters of a minimum wage hike usually take it as an article to faith that it will effectuate a reduction in poverty by raising incomes for the working poor. Yet the vast majority of empirical evidence suggests otherwise. Most studies, such as Neumark and Wascher in 1997, Vedder and Gallaway in 2001, Sabia and Burkhauser in 2010, and Sabia and Nielsen 2012 find that minimum wage hikes have no significant effect towards reducing poverty. This is because there are several factors either trivialize or negate the positive effects of a higher minimum wage. First of all, 80 percent of minimum wage earners are not in poverty. The mean household income for a minimum wage worker is around fifty-one thousand dollars a year, because most minimum wage workers are actually second and third earners in their household. Three out of five minimum wage workers end up getting a pay raise anyway within their first year. As it currently stands, the median age of a minimum wage worker is 24, and single parents working full time only constitute four percent of minimum wage workers. Ironically enough, raising the minimum wage is least likely to benefit the workers who actually are in poverty, because as their income rises, many see their government benefits sharply reduced. And of course, the minimum wage is going to have a hard time reaching the 65 percent of impoverished adults who are not employed. To make matters worse, raising the minimum wage comes with adverse side effects. Among these include higher food prices, and a decrease in employment opportunities, which brings me to my next point. 

Point #5 

The minimum wage worsens unemployment for the low-skilled. Now this point has been heavily researched and discussed amongst economists, especially with the new minimum wage research that has proliferated since the 1990s. Nearly two-thirds of new minimum wage research studies indicate a negative employment effect associated with the minimum wage. But a few studies have purported to find a zero or positive effect of the minimum wage on employment. One such study was done by David Card and Alan Krueger in 1994. More recently, another was done by Dube, Lester and Reich in 2010, and another by Allegretto, Dube, and Reich in 2011. These studies have numerous flaws, as David Neumark and William Wascher have pointed out. Most of the details are too extensive for this video, but I would like to indulge in the following. Suppose it were true that the minimum wage has zero effect on the quantity of labor employed by low-wage employers. In that case, it would still be likely to have deleterious effects on the employment prospects of the low-skilled because of something called “labor-labor substitution.” Hypothetically speaking, even if employers paid for the higher minimum wage entirely through prices, productivity, and reduced turnover, the positive supply effects of a higher wage would give the employer a larger labor pool to draw from. Consequently, they would be able to select more-skilled applicants at the expense of those who are less-skilled. And to add insult to injury, lower turnover means fewer job openings for those looking to get a foothold in the job market. Thus, a higher minimum wage would still make it more difficult for the low-skilled to find employment, even if the employer’s elasticity of labor demand were zero. So it should come as no surprise that when we segment the labor force by skill level, as economist Antony Davies and many others have done, we find that a higher minimum wage is correlated with higher unemployment for the lowest-skilled members of the work force. This is also why in their meta-study of new minimum wage research, Neumark and Wascher concluded that, “the studies that focused on the least-skilled groups provide relatively overwhelming evidence of stronger dis-employment effects for these groups.” All in all, three-quarters of economists recognize that   the minimum wage has negative effects on the employment of low-skilled workers. 

Point #6 

The minimum wage hurts the disadvantaged. Most advocates for a higher minimum wage are undoubtedly motivated to improve the well-being of the worst-off members of society. But good intentions are no excuse for bad results, and the minimum wage is just that for the lowest-skilled members of the workforce. Not only does the minimum wage make it more difficult for less-skilled prospective workers to find jobs, but evidence suggests that it also has a long-term negative effect. A 2004 study from Neumark and Nizalova found that exposure to a higher minimum wage during young adulthood is associated with lower earning several years later, and that the main reason for this is a deprivation of work experience during younger years. They also found that this effect was more pronounced for blacks than any other racial group. This is unsurprising, given how black teenage unemployment is exceedingly high, in great part due to the minimum wage. 

So there you have it. Average productivity is not the same as marginal productivity. $16 in Australia is not the same as $16 in the US. Being on the minimum wage is not the same as being in poverty. Raising the minimum wage is not the same as helping the disadvantaged. Good intentions are not the same as good results. And for those reasons, raising the minimum wage is not the same as a good idea.

Special Thanks to Skyler Lehto for permission to transcribe as well as my wife for transcribing this.