Swiss Vote Down $25 Minimum Wage

The Swiss voted down a referendum to institute a minimum wage of $25 per hour (~$50,000 per year) by a 76 to 24 margin.  Currently Switzerland does not have a minimum wage.  Apparently, fears over job cuts led to the defeat.

The minimum wage issue is a battle between two competing ideologies.

One ideology rests on the idea that all businesses are excessively wealthy, that all businesses are sitting on huge piles of money which is serving only to make business owners richer, and that while those business owners are getting fatter every day they are doing everything they can to cheat their employees out of their fair share of the profits in an effort to keep the entire work force below the poverty level.  It is this world view that leads many to believe that raising the minimum wage is not only justifiable, but would have no impact on job creation because "the money is there".  From their point of view, the only result of raising the minimum wage is that the gap between the rich and the poor will shrink, and this they will say, is a good thing for society.

The case against the minimum wage rests on the economic principle that in a free market people get paid what they are worth to the company.  If a person is only capable of performing a $10 per hour job, and we raise the minimum wage to $15 per hour, then we have pushed that person out of the workforce because we have made it illegal for a company to pay them what they are worth.  This leads opponents to believe that raising the minimum wage will not only boost unemployment, but it will hurt the those who are least qualified... the very group it was intended to help.

So we have an ideological battle between one idea based on class warfare, and the opposing idea based on free market economics.

An interesting thought experiment would be to consider what would happen to employment numbers if the US set the minimum wage to $25 per hour.  Is the person greeting you at the door worth $50,000 per year to Walmart?  How many people would be working at a McDonalds?  Could the McDonald's business model even survive a $25 per hour minimum wage?  How many business models could?   All of these questions force us to determine if all business owners really are sitting on a huge pile of unused profits, because if they aren't, then raising the minimum wage will cause more harm than good.

Just recently we gathered some evidence that will help us find out if the class warfare supporters have a good case.  ObamaCare was passed using the argument that high health care costs are due to excessive health insurance company profits, and if we could just pass a law forcing them to give up their ill-gotten gains, then health costs would come down and people would get better health care coverage at all levels.  It would be a win-win for everyone except the few scoundrels who were hoarding wealth in the insurance companies.  Well, we passed a law - costs went up - and health care coverage went down.  Ouch.

The class warfare ideologues were wrong... and not just a little wrong.  They were catastrophically wrong. 

Maybe we should give the free market ideology a chance next time.