The Minimum Wage Doesn’t Apply to Everyone

The concept that everyone should earn at least some government-mandated minimum wage is politically very appealing. It’s almost the classic example of taking from the few and giving to the many. “The few” in this case are portrayed as rich businessmen who could never spend all the money they have, so what’s wrong with making them pay their workers a little more?

Oregon currently imposes the third-highest minimum wage in the country at $9.25 an hour, following $9.50 in the District of Columbia and $9.47 in Washington State.

In the upcoming legislative session, some Oregon lawmakers propose raising our minimum wage to anywhere from $12 to $15 per hour. But not for everyone.

Minimum wage laws conspicuously leave out a class of individuals who don’t get a paycheck from someone else, but hopefully get one from themselves. Self-employed people, small business owners, and entrepreneurs trade a steady paycheck for the opportunity to be their own boss. They often risk everything―their homes, their savings, all their assets―to build a business that might someday earn them a much higher paycheck than they could ever earn working for someone else.

But, while building a business, many entrepreneurs actually earn less than the minimum wage, and they often have negative earnings, dipping into savings or borrowing money to keep their doors open. And yet, if these risk-takers hire workers to help them make their businesses succeed, government says they must pay those workers at least $9.25 per hour here in Oregon now, and perhaps as much as $15 per hour in the near future.

So, while business owners are free to do a lot of things, and take a lot of risks, one thing they cannot do is hire anybody for less than the minimum wage, even if they are earning less than that themselves. Of course, this may not be a winning argument politically.

I debated a $15 minimum wage advocate on television recently, and I assume he still believes in his cause. I just hope that if he succeeds, the young, less educated, less skilled, and minority workers his policy harms place the blame for their troubles where it belongs―not on employers, but on bad government policy.

About Steve Buckstein

Senior Policy Analyst and founder.
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One Response to The Minimum Wage Doesn’t Apply to Everyone

  1. Tom Holt says:

    That is so true. I remember well that when my dad first got into his business (a tavern), thee were many times when his paychecks sat on his desk uncashed, so that he could pay his employees.

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