What's the problem with the minimum wage

We state: One of the latest achievements of the social market economy has passed its baptism of fire: Not only has there been a statutory minimum wage in Germany for a year and a half without the economy collapsing. Rather, the minimum wage commission, which was founded at the same time, has now actually noiselessly agreed on an increase in the previous wage, even though representatives of different interests are united, and unanimously. The legal minimum wage, which started at 8.50 euros, should be 8.84 euros an hour in the future, thunder!

Employees and employers are satisfied, politicians don't need to quarrel, and nobody listens to the usual market-radical whiners any more; there is calm in the country.

One can be happy about that, after all we have other and more pressing problems. But one should know that the peace is borrowed, it depends on the comfortable economic condition of the country. Germany is doing extremely well in historical and international comparisons. The economy is running with great strength, exports are booming, demand is increasing, workers are being sought almost everywhere, and at the same time the Federal Minister of Finance can forego getting into debt without even having to make huge savings.

The minimum wage law is a fair weather event

Increasing the minimum wage by 34 cents an hour during these times is not a risk. And it is no wonder that the number of jobs has increased, even though the opponents of a minimum wage feared the destruction of jobs. Many of us are just doing too well. But if the economy collapses, unemployment rises and the state runs out of money, if companies have to turn over every penny again, then even the 34 cents, or whatever may be added in the next round of the commission, will quickly become a mortgage.

The minimum wage law, a matter close to the heart of the SPD, checked and approved against better knowledge by a CDU Chancellor, who was primarily concerned with the coalition peace, is a fair-weather event: It only works as long as there is an urgent demand for workers. The creators of the system didn't care. They were concerned with the principle, with a signal against exploitation: Look here, Germany is doing justice.

The economy is not a cosmos kit

This very fundamental approach is strangely at odds with the small-scale detail with which we are now discussing. The minimum wage commission should be based on the collective bargaining index, i.e. the increase in the average collectively agreed hourly wages. If you take the degrees since the beginning of 2015, you come to 8.77 euros. But should one perhaps also add the younger degrees that have not yet been paid out? Then you get 8.84. Or round up to 8.85? In return, the employer representatives would have asked for concessions elsewhere, so they left it.

The whole thing is a mechanistic brawl based on the idea that you can tinker with the economy like a Kosmos construction kit. What is missing is an understanding of the nature of a market economy, trust in market processes. The awareness that wages are also market prices and find themselves better.

The vast majority of companies can still cope with the statutory minimum wage without having to cut many jobs. And where that does not succeed, it is quietly and secretly undercut. Because almost every economist knows that from theory: If work is too expensive, there is less demand for it. When the economy gets tough, the minimum wage becomes a problem.

And actually this situation is already there, only it is hardly noticed: the many refugees in Germany urgently need cheaper entry salaries if their integration is to succeed. But the grand coalition does not want to touch that, it does not fit into the worldview of the social screwdrivers.