After Congress increased the minimum wage, I assumed we could all march into the future together, arm in arm, singing “Kumbaya.”
Once again, feel-good politics triumphs over logic and facts, spending other people’s money by increasing the cost of doing business for everyone, aided and abetted by the unions, creating a solution to a problem that really can’t be solved by legislation.
By increasing the floor for wage rates, the compensation for every other position in those firms that employ people at the minimum wage will also have to be increased, in order to maintain appropriate differences between the various positions in the organization, while the unions use the increased minimum wage as the rationale for arguing that it should be used as the basis for increasing the wages of all workers.
Here are some questions for those who support the continued increases in the minimum wage: Does raising the minimum wage for a few low wage workers actually make it possible for them to live? Raising an employee’s compensation, say by $5 an hour, would increase their gross pay about $200 a week, or $866 a month. If you add that to the approximately $1,733 a month they may already be earning (at say $10 per hour), their total gross will be about $2,600 a month. Does that make it possible for them to buy a home or live in the affluent communities where many of them are employed?
If a minimum wage can be created by fiat, why not make it $20 an hour, or even $40 or $50? Why not take it to the max and legislate the rate of pay for all jobs? How about $100 an hour for everyone? Sounds good to me.
If paying a minimum wage is a responsible way for government to do business and municipalities, should government money be used to buy goods and/or services from vendors who pay poverty-level wages? How does any city or county avoid paying higher fees to outside contractors, whose bids will necessarily factor in the higher wage mandates? Contractors will certainly not absorb increased labor costs for the privilege of doing work for the government. Obviously, more costly contracts for the government work will have to be absorbed in the budget, which ultimately falls to the taxpayers.
Does anyone know how much the minimum wage should really be? After all, one man’s minimum wage may be another’s poverty wage.
The wage rate that would qualify as an adequate living is clearly in the eye of the beholder and will also vary between different geographic regions and local costs of living. Most people would probably agree that it costs more to live in some communities than others, but we would probably find little agreement on the amount that is needed to support a reasonable lifestyle in any community.
So, just what amount of compensation is necessary to provide an adequate living and who should make that decision? It appears that the federal government, state legislatures and city or county governing bodies are becoming the decision makers in such matters, rather than the free market.
Who benefits from a minimum wage? Certainly not local governments, which have to pay higher prices for goods and services from vendors – who will be required to raise their prices. And surely not the taxpayers, who will undoubtedly bear the burden of additional taxes to cover the increased costs of doing business that occur every time the minimum wage is increased.
Proponents of the minimum wage argue that it is necessary to provide an adequate standard of living for families. Although it seems pretty clear that the federal minimum wage, at $7.25 an hour ($11,960 a year), is not an adequate wage on which to support a family, it is not clear how many people who are paid the minimum also have that responsibility.
The Employment Policies Institute website noted, “decades of research have shown that minimum wage hikes take a sledgehammer to the entry-level job market. As employers are faced with higher labor costs, they hire workers who have the most experience or high skill levels. That leaves unskilled applicants, particularly teens, without that critical first job experience.”
After Congress began implementing the wage hike in 2007, more than 480,000 teen jobs disappeared across the country.
© 2012 Harris R. Sherline, All Rights Reserved