Memo to Mayor Pete: The minimum wage for entrepreneurs is zero dollars

Memo to Mayor Pete: The minimum wage for entrepreneurs is zero dollars
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Let’s be clear: Mayor Peter Buttigieg’s off-color remark equating minimum wage opposition to being an oppressor of the poor isn’t just ignorant. It ignores elementary school economics.

Politicians like to look at the minimum wage debate and only talk about the worker. For Democrats, this is a household talking point designed to earn votes. But it’s lacking reality. You can’t analyze only a third of the equation and expect to produce a winning formula. 

Creating jobs is a process that involves entrepreneurs, workers and consumers. All three of these items dictate the worth of an employee, not just what the government deems as a minimum wage.

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The concept is alarmingly simple: When labor costs rise, people lose jobs. In 2016, Seattle Democrats raised the city’s minimum wage for large employers to $13 an hour — 37 percent higher than the statewide minimum wage at the time. 

Within a year, the minimum wage hike cost the city more than 5,000 low-wage jobs, bringing the net earnings per low-wage job down by an average of $125 per month. According to the University of Washington's research team, "In percentage terms, the loss of jobs was significantly larger than the gain in hourly wages.”

Seattle is the rule, not the exception. At the federal level, a $15 an hour minimum wage — now a staple of any Democratic platform — would trigger 1.3 million lost jobs nationwide. (And that's a conservative estimate.)

Moreover, those workers fortunate enough to keep their jobs would be forced to take on more responsibility and work longer hours, as employers attempt to offset the negative impacts of a reduced workforce. Is that really what America’s working class needs?

President Franklin D. Roosevelt signed the country’s first federal minimum wage into law in

1938, setting it at 25 cents per hour. Since then, Congress has raised the federal minimum wage 22 times, yet one-third of Americans still live in poverty or “near-poverty” (including 14.8 percent of Americans below the poverty line).

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Indeed, the poverty rate has fluctuated between 10 and 20 percent for decades, regardless of the federal minimum wage in any given year.

The best way to help those in poverty is to allow the marketplace to work and make it easier for individuals to find opportunities in the small business sector. The American economy, after all, is a small business economy. America is home to more than 30 million small businesses, all of which employ roughly 60 million workers — half of the private-sector workforce.

Over 280,000 of those small businesses are exporters, ensuring that we remain competitive globally. All of them were started by entrepreneurs, many of whom took incredible risks to make their ideas a reality. Some risked all they had to launch their businesses and hire the employees needed to grow them.

And what was the minimum wage for the entrepreneur? Zero dollars.

Companies like Amazon, FedEx and Turner Broadcasting didn’t earn a dollar of profit for five years after they were launched. It took years for them to become the household names we know today. ABC’s hit show "Shark Tank" is overflowing with stories of entrepreneurs who chose not to pay themselves a salary in the early days of their business lives.

If our society is indeed built on the American dream (yes, it still exists), then such sacrifices are the building blocks that will see it endure for decades to come. The story of the entrepreneur is an inspiration to us all and one that America should be proud of.

Democrats like Buttigieg would be better served harnessing the entrepreneurial spirit than disparaging those who embody it on national television. Pinning our hopes on any government mandate is a fool’s errand. It doesn’t take an economic expert to understand that.

Buttigieg quoted the Proverbs scripture, "Whoever oppresses the poor taunts their maker."

This prompts a serious question for Mayor Pete: If a government-mandated minimum wage hurts poor, low-skilled workers the most, then wouldn’t those politicians pushing for irresponsible policies be the oppressors?

Cliff Maloney serves as president of Young Americans for Liberty.