Monday, August 4, 2014

Myths About The Minimum Wage

  The Dem's are in an all out push to raise the minimum wage. This is a non-issue to me. Lately I have noticed more and more propaganda on Facebook about it. The last time I worked for minimum wage was January of 1968 when I was a seventeen year old Senior at East High working for the Big Star grocery store on Riverside Drive making a whopping 1.40 an hour. I worked for them about a month before I left to take a job at Baird-Ward Printing Co. Before Big Star I worked at H.G. Hill at 6th and Shelby from July 1966 until January 1968 where I also earned minimum wage. Baird-Ward was my first job that paid higher than minimum wage and I have never looked back since. The following are the facts about minimum wage. According to the Bureau of Labor statistics in a country of 317 million people only 3.6 million people are at or below the minimum wage. That is 2.5% of all workers in the United States and 1.5%^ of all potential workers. Of that percentage 31% are teenagers working entry level jobs. Fifty-five percent are 25 years or younger. That leaves 1.1 percent of workers over 25 and 0.8 percent of all Americans over 25 earning the minimum wage. There are many myths about minimum wage. One myth is that it helps poor people. No it doesn't. Most minimum wage workers are from above median income families. Another myth is that it puts more money into the hands of spenders creating more sales and jobs. No because every dollar that goes into the pocket of the employee comes out of the pocket of the customer and owners. In the same market that means they will have less to spend. On top of that the minimum wage worker will spend money at the same type of establishments as they work at which means that they will spend the extra money they make paying the higher prices that will result from a higher minimum wage. 

  The following is from a Forbes article on the minimum wage. McDonalds et al makes billions of dollars and can afford it. Incorrect. What’s the difference between 10,000 independent burger joints and McDonalds? Fundamentally, nothing. If each independent establishment made $100,000 in profit, it would be easy to see the impact of raising the minimum wage. Redistributionists would see 10,000 establishments aggregated financially into one, with profits of $1,000,000,000 and presume that this is somehow unreasonable and should be shared. But each of the establishments must stand on its own bottom, providing a reasonable return to the capital invested in it, whether by a single investor/owner or a corporation. Another myth is that the effect on employment prospects will be worth the extra costs. Not to those employees that will not be hired because of higher costs. One effect of a raised minimum wage is that it will encourage employers to turn to automation in order to reduce the number of humans in the workplace. There are many arguments against raising the minimum wage but I think these are some good reasons not to. Minimum wage was kept low during the Reagan years and the market set the wage. This is the best policy in my opinion. Most fast food restaurants paid higher than minimum wage during the 1980's because they couldn't keep employees at minimum wage. This meant that in order to keep employees they had to pay a higher market wage. If people want higher wages they have to go where the money is and they have to have higher expectations. 

  After 1968 I could not afford a minimum wage job and I looked until I found the higher paying jobs. As a Union Chief Shop Steward that sat on the negotiating committee's for four contracts with the Bakery, Confectionery, and Tobacco Union during the 1970's and early 1980's I realized that Unions are the main instigator for raising the minimum wage because the higher the wage the higher their wage demands. If minimum wage actually affected more people and people who were actually supporting families the Democrats might have a legitimate argument. Because the issue is so misunderstood, by so many people, it is one of those emotional issues that they are able to capitalize on. Even many so-called conservatives are in favor of raising the minimum wage. It is a way to arouse class envy. It falls into the same category as when they scare old people by accusing Republicans of wanting to make cuts to social security, or claim that Republicans want to starve school children, deny women birth control or when they race bait by calling Republicans and conservatives racist because we don't like Barack Obama. A real conservative is more concerned about creating real jobs by cutting taxes, cutting spending, deregulation, and getting government out of the private sector than raising the minimum wage. This government has created vast uncertainty in the marketplace and there is nothing more devastating to an economy than uncertainty. If this economy was strong the last thing people would worry about is the minimum wage.
         

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