By Steve Byas

Oklahomans will go to the polls on June 16 to vote on State Question 832 – a proposal to have the government, not the free market, determine what is a proper wage.

If it passes, the government will force employers to pay their employees a “minimum wage” of $15 an hour, which will increase over the next few years. In 2027, the wage will be $12 per hour, followed by $13.50 an hour in 2028, before reaching $15 an hour in 2029. From there, it will continue to rise, depending on the cost of living at the time.

Advocates ignore reality. It is like saying that the government can, by decree, say that 2 + 2 = 5.

Wages are the price of labor. And, like all prices, such as profits (the price of entrepreneurship) and interest rates (the price of capital, including loans), and rent (the price of land), government should have no say.

First of all, the proposal ignores the negative consequences that will result. Jobs will be lost for those with low skills, and businesses will fail. California increased its minimum wage for fast food workers in 2024 and almost 20,000 jobs were eliminated.

How will the government determine what is a proper “minimum” wage? They will use the Consumer Price Index for Urban Wage Earners and Clerical Workers. One problem is that the cost-of-living in rural and small town Oklahoma is lower than what is found in larger cities like Oklahoma City, Tulsa, and Norman. The effect of this government-mandated wage increase will be to impose a burden on retailers in these smaller towns that they will not be able to bear. (This will also negatively impact businesses in the metropolitan areas, too). Businesses will fail, and lower-skilled persons will be without a job.

With declining sales tax revenue, these communities will be hard-pressed to pay their bills. There will be fewer retailers, including grocery stores, in these small towns.

If one sets a price floor (such as a minimum wage), a surplus is created. If a price is set higher than the market price, this retards demand, and increases supply. Fewer will buy the product (in this case, labor), and more will apply for the higher-paying job. As it is right now, the market price for labor is generally much higher than the present minimum wage. But if the wage is imposed higher than the market, there will be a surplus of labor (unemployment). Businesses will try to pay the wage with fewer workers, higher prices, and automation (which will replace the low-skilled workers). The business can charge a higher price, but that doesn’t mean that consumers will pay it.

If one sets a price ceiling on a product, it increases demand, and retards supply. This creates a shortage. It makes as much sense as the Oklahoma Legislature passing a law that the temperature must remain in a certain range.

Market prices are a signal to producers and consumers. If the price rises, that is telling producers to make more of a product. Some consumers will fall out of the market because they are not willing to pay the higher price. And guess what? As more of the product is then produced, the price will fall. This happened in 1981, when President Ronald Reagan ended price controls on oil.

If a price falls, this tells producers to make less of a product, and direct their resources to something else that consumers want. When the price falls, however, some consumers who previously did not buy the product will enter the market.

I know some do not want to hear all of this. They want the government to simply decree a lower price for them (as a consumer), or a higher price for them (as a producer).

The essential question is this: Do you believe in freedom? If you believe in freedom, then you should oppose the government setting any prices at any time.