Monday, April 18, 2016

Jacking up the minimum wage to $15/hour is just plain dumb

"A living wage" is only fair, right?  Everyone should make a 'living wage.'  It's what employers everywhere in every industry should pay, gosh darn it.  It's only fair.  And $15/hour is the minimum anybody should be paid to do anything in the land of the Free and the home of the Brave.  Period.

Right?

So wrong.  Such a dumb mistake on oh so many levels.

I sincerely wish that we would teach just basic "Economics for Dummies" in high school, or perhaps even start in grade school.  The curriculum in, say, 5th grade should include instructional techniques as to how to start up and run a lemonade stand.  Going through the basics would underscore the nature of how things work in a capitalistic, market based economy.

And it would in the most simple terms underscore that everything has a price, and that when the price of virtually anything goes up (and we shall leave out the concept of price elasticity and in-elasticity for  now), demand for whatever that is will go down. Simple economics.  Simple display of human behavior.

Wages are nothing more and nothing less than the price of labor.  And as sure as the sun rises in the east and sets in the west, if mandated minimum wages are arbitrarily set higher, then the demand for them (or employment) will fall.  Unemployment will be the guaranteed result of raising the minimum wage to $15/hour.

In a true, correctly operating market driven economy, the inarguable minimum wage is $0.00 per hour.  That is the going wage for somebody with absolutely no skills whatsoever.  Now, once you train this no-skilled person, then their value goes up accordingly.  But up to a $15/hour level?  This is only true if their output makes their employer at least $25/hour in value.  If not, then the employer is losing money, since they have to pay FICA, Medicaid, healthcare, etc. in addition to the $15.00 basic wage.  And employers are not in business to lose money.

Human behavior is such that if this mandated minimum wage is raised to $15/hour, employers will not just sit back and eat this cut in their profit margins.  They will either fire people, close businesses and simply leave the money they had invested in the business in their bank, or find other ways around the cost increase in their labor, perhaps through automation.  

There is basic data available now from a decision made last year to jack up the minimum wage to $15/hr in Seattle, Washington: unemployment is up considerably in the 18-25 year old segment of the population. 

But telling this to the $15/hour or 'living wage' crowd falls on deaf ears.  Much to the detriment of their constituents.   

11 comments:

LL said...

With the lovable personality of a drowsy badger and the voice of a bullfrog, Bernie is fighting against oligarchical imperialism, exploitative corporatism, and economic logic, with a promise to make the government much larger, wages much higher (irrespective of merit or value) and to triple the national debt.

A Bernie Regime means that I need to switch to earning where I can be paid in cash. Not as difficult as one might think. The $15/hr thing will expand unemployment and will spur inflation. Which increases government spending and general misery. Socialism doesn't work, but it plays well to people who don't read and want to pick their neighbor's pocket.

Adrienne said...

The Sea-Tac folks who jumped immediately to $15.00 per hour are asking for fewer hours now since they lost all their bennies.

We were just at the Taco Bell (I know - hubby likes it for some unknown reason.) Anyhoo, the owner runs a tight ship. He wins awards for being the cleanest place, etc. I counted 7 people (without earrings or tattoos - a plus) working. I asked the young man who took our order and was now cleaning in the front if Taco Bell had such a thing as "shift managers" like McDonalds. He said they did. They start at $10.50 or so an hour. He volunteered that he was new and made $8.25 per hour.

It doesn't take a phi beta kappa to do the math. If six of them were making $15.00 per hour, and the shift manager was making $18.00 per hour, the first $109.00 of every hour would be labor. That number does not include taxes or any of the myriad of other costs of labor. There is no way a fast food place can operate at that cost of labor.

Not to mention, that while the young man who waited on us was very pleasant, he wouldn't be qualifying for any scholarships. In addition, he thought his pay was "great" and absolutely loved his job.

Gorges Smythe said...

I understand the frustration of BOTH sides. Compared to the PURCHASING power of minimum wage of years ago, today's dollar is worth pennies on the old dollar's value. I've read that it would take a wage of about $22 an hour to match that purchasing power. Unfortunately, despite many American companies being far more greedy than most foreign companies (feel free to check it out), they, too, have had to learn to deal with the declining value of the dollar. At this point, no matter how deserving the workers may be of that money, the companies really CAN'T afford to pay it. The people that we should ALL be angry at are the FED and the INTERNATIONAL BANKERS who found a way to steal the value of the dollar and leave ALL of us holding the bag.

Fredd said...

Gorges: 'many American companies being far more greedy than most foreign companies...'

What in tarnation are you talking about? Greed has nothing to do with any business of any kind in America. It's all economics, and 'greed', whatever your definition of it is, is irrelevant.

I don't really have the time or inclination to lecture you about this statement, but leave it as God's truth: you have been fed a line of class envy that has no basis in fact in the Land of the Free and the Home of the Brave. Greed? What, when people make a profit? That's the bed rock of our country, Gorges. And to maximize that profit, while still serving whatever need your company serves, is in the best interest of everybody. These owners don't just greedily screw their customers so that they can live lives of luxury on their opulent yachts, dining on lobster and caviar.

Some do, but they get there by serving millions, and bettering millions of lives. And if they do that, let the lobster and caviar flow, Gorges. Good for them. Hooray for their success. This is America, not Cuba.

Man, you have a lot to learn about America.

Fredd said...

Adrienne: since you tapped me for your Veep in the Adrienne administration, I must defer and unabashedly support your position on all matters of foreign policy and national security. You have my allegiance that I will get behind your platform.

Now, Adrienne, I would respectfully ask you to stop reading at this point. God Bless.




Is the mike off? Are we off the air? Good. WHAT? I can't believe what I just read: Taco Bell is the best thing that ever came from south of the border besides Puerta Vallarta beaches. Their standard crunchy taco, with hot sauce on the side, is arguably the best fast food available anywhere on earth. How could someone disparage such a delicacy? Man, I got my work cut out for me if I am going to be part of this ticket going forward....

Fredd said...

LL: Yes, I know Bernie has no idea of what is good for our country. He's just like Karl Marx and Vladimer Lenin, both were parasites who schemed on screwing the rich guys in order to make society 'fair,' as neither was ever a participant in the German or Russian economies, respectfully.

In jacking up wages to an arbitrarily high level, sure, it's a short term benefit to the one guy at that fast food restaurant who is left, and a complete bummer to the other two guys that got shit canned.

And I say short term: that one guy who is left and making his $15/hour will be worked like a dog until he drops. The boss will want to see every cent of that $15 bucks/hour in the form of increased output by that poor schlubb who's left. And if he doesn't, that guy will get the boot, too, when the business folds.

How this horseshit philosophy of Bernie's falls on its face in the medium and long term needs to be shouted from the mountaintops.

keith moore said...

LL,

The longer term result will be deflation not inflation. As the minimum wage goes to $15 and a great increasing of unemployment ensues, taxes will be raised to pay (not just income but employment taxes) further increasing unemployment. That type of government will increase employment by increasing the size and scope of government and print the money to do it with government unions either increasing wages or government exempting themselves from the increases in he minimum. No one working (except, as you mention "under the table") will cause a great deflation/depression and decrease in velocity of the money supply. Additionally, as the source of fund for the government will become stagnant dollars, savings will be taxed and the big bucks will flee the banks, stock market and the country.

Elections every two years will cause a buffering effect, maybe.

Fredd said...

Keith: the effect on unemployment will not be 'great,' since the total number of folks in the US workforce making minimum wage is perhaps 4% of all workers. Still, jacking up the minimum wage to $15/hour will decrease this number to something lower than it is now.

Your deflation argument assumes huge shifts upward in unemployment, and that won't be the case.

Kid said...

Fredd, How many people know that a number of unions tie their salary level to the minimum wage?

But what they hey, Marking up minimum wage will surely create jobs AND lower costs across the board as Bernie promises us. LOL !

LSP said...

Commies always seem to think there's an invisible and enormous pot of cash out there which business owners are hiding. So they grab the owner's money and the business fails, leaving them wondering why they don't have any money.

Saying that, some of the commies seem to do very well for themselves, like Hillary. I guess they've found that mythical pot of gold at the end of the rainbow. Come to think of it, the GOP establishment seems to be cashing in on the same ticket.

Watch out, holiday dachas on Martha Vineyard...

Fredd said...

Pastor, you and I both are withholding our analysis as to why these commies are surprised when the hosts that they leech upon eventually wither and die.

But I will break my silence.

These parasitic commies are one of two things: 1) stupid, any reasonable person would conclude that when you suck the assets out of a company without putting any value back into it, that company will suffer and eventually fail. 2) Evil, and this is worse than stupid. These commies KNOW that they are harming the company by stealing its assets, but they simply don't give a rat's butt that their parasitic actions are harmful to the host, which would be one of the defining tenets of evil.