Swiss citizens have provided a glimmer of light within the statist darkness into which the United States has plunged. In a national vote, they rejected a proposed national minimum wage of $25 an hour. Even better, they understood why the proposal was going to be destructive to working people, especially those at the bottom of the economic ladder.
Notice something important here: The $25 per hour minimum wage proposed for Switzerland is more than double the $10 per hour minimum wage favored by President Obama for here in the United States.
Doesn’t that imply that the Swiss statists who were backing the proposal are kinder, more compassionate people than President Obama? Why is Obama being such a piker when it comes to helping the poor? Why isn’t he matching the $25 an hour that Swiss statists proposed for Switzerland?
Indeed, why not make the minimum wage $100 an hour? Wouldn’t that really help the poor and defeat poverty? Think of all the prosperity it would produce. Everyone would have more money to spend at the malls, thereby creating more sales and more jobs for everyone.
In actuality, a $100 per hour minimum wage would be disastrous, especially for those at the bottom of the economic ladder. That’s because value is subjective, including the value of labor. Most employers wouldn’t pay their workers $100 per hour because it wouldn’t be worth it to them, and they know that they would quickly go out of business if they did.
If the minimum wage is set at $100 an hour, what happens to all the workers whose labor is valued in the marketplace at less than a $100 an hour? They go unemployed! No one is willing to hire them at $100 an hour. Unemployment soars, along with government unemployment compensation and the taxes needed to fund it.
As the majority of Swiss voters clearly understand, the principle is the same at $25 an hour. There are certain workers whose labor is valued in the marketplace at less than $25 an hour. What happens to a worker whose labor is valued at, say, $9 an hour? That worker, along with lots of others, goes unemployed.
Luisa Almeida, a Portuguese immigrant who works in Switzerland as a housekeeper and nanny said in a USA Today article that if she could vote, “I would vote ‘no.’ If my employer had to pay me more money, he wouldn’t be able to keep me on and I’d lose the job.”
Almeida has a better understanding of economic principles than American economists who favors minimum-wage laws.
Her sentiments were echoed by Johann Schneider-Ammann, Switzerland’s economic minister, who declared in a New York Times article: “A fixed salary has never been a good way to fight the problem. If the initiative had been accepted, it would have led to workplace losses, especially in rural areas where less-qualified people have a harder time finding jobs. The best remedy against poverty is work.”
Daniel Kubler, a professor of political science at the University of Zurich, pointed out in the same Times article, “Switzerland, especially in popular votes, has never had a tradition of approving state intervention in the labor markets.”
Wow! That sound like the way America used to be! After all, don’t forget that from 1787 until President Franklin’s socialist-fascist economic revolution in the 1930s known as the New Deal, the United States, like Switzerland, never had a national minimum wage law and had the same antipathy toward economic intervention that the Swiss have.
What about the Swiss unemployment rate? It ranges from 2-3 percent. Compare that to a permanent unemployment rate of 40 percent for black teenagers in the United States, who are locked out of the labor market by the federal government’s minimum-wage laws.
America is mired in a debate over how much the minimum wage should be raised. That’s the wrong debate. The debate should be over whether the minimum wage should be abolished entirely. And it should be! Perhaps the Swiss defeat of a national minimum wage for their country will shed some light on the direction the United States should take.