Adam and Steve have known each other for a long time. They've grown together, worked together and have established a strong bond. After many months, this bond culminates in an evening together, where their relationship takes on a new dynamic. No one has been hurt — in fact, both men are better off because of what they've done together. In spite of this, there are government bureaucrats who want to regulate this type of relationship. Some politicians want to make their behavior illegal if it doesn't satisfy their arbitrary standards. This presidential cycle, an entire party of candidates are running on the platform that they'll make those standards even stricter.
Of course, I'm talking about Adam's new job as a contractor at Steve's construction and remodeling business, which politicians like Bernie Sanders want to make a crime if Steve pays Adam less than $15 per hour.
If I decide to sell my old Pokemon cards on Craigslist, no government agency threatens me with a fine or jail time if my price is too low. There are plenty of good reasons I might be willing to part with my cards at a lower cost than what others might consider "reasonable." Maybe I've already tried selling my cards in the area at a more standard price but not found any buyers. Perhaps I just really need cash now and want to move them quickly. Whatever my reason, we would think it were ridiculous if the government tried to set a minimum price for Pokemon cards or most other things we want to sell. Why are so many people willing to accept such a restriction when they try to sell their time and effort?
Most proponents of the minimum wage say that it protects against greedy employers who want to pay their workers less than their worth in order to make a larger profit. This view demonstrates a misunderstanding of the basics of competitive markets. Steve wants to make as large a profit as possible in his business, but so do all of the other employers in the area. If Adam adds $11 an hour in value, then Steve will have to pay him close to this amount or one of Steve's competitors will outbid him for Adam's services because they also want to make money. This competition ensures that Adam gets a fair salary without any laws needing to be passed.
Minimum wage raises are often extremely harmful for the exact group of people those policies are attempting to help. If the minimum wage in Adam's area were raised to $15 an hour, like it was last week in California, Steve will have to either pay Adam that higher wage or fire him. Adam still only generates $11 an hour in value, so Steve will lose $4 an hour for every hour that Adam works if he gives the raise. Steve wants to make money, so he'll have to fire Adam. California wanted to ensure that Adam had a "living wage," but now he has no wage at all.
This isn't just a theoretical concept — many economists say that minimum wage raises cause increased unemployment and that these increases are felt most by the lowest skilled workers. Low-paying jobs aren't meant to be positions for people to make a living, they're supposed to be stepping stones upon which to climb to actual careers.
If they are no longer serving that purpose, we as a society have a larger problem — one that will only be made worse by following California's lead.