Well, after the November mid-term elections, it's fairly evident that the American Socialist party is back in firm control of both houses of congress. Once again, we're hearing rumors of the minimum wage being raised. Setting an arbitrary minimum wage, enforced by the federal government, is idiotic on a number of levels and I'm going to explain to you why that is so.
Hurts those it would help
Retail stores, like Wal-Mart and Target, and fast food chains, like McDonalds and Wendys, employ millions of low-skill workers at the current minimum wage. These stores target the middle-to-lower income brackets and provide goods and services that are affordable to the very people who work for them. Most of these stores, if not all, provide a further employee discount for the merchandise or services that are provided to the public for an already reasonable price. Raising the minimum wage would affect those employed in a few ways.
It would result in the elimination of jobs. Doubling the payroll amongst the largest part of your workforce across a national business tends to impact the bottom line. The money has to come from somewhere. If it impacts the profitability of a company to the point where the company starts to lose money, the company has to cut costs somewhere or go out of business. Generally, the cuts start at the low-skilled positions, as they are the easiest to replace quickly. If the businesses are already at minimum staffing, that only leaves one other alternative.
Raise the cost of goods and services. This is textbook inflation. If the business cannot operate on fewer people than are currently employed, they must then raise the cost of goods and services to cover the profit loss. This impacts the very people the wage hike was designed to help as they now must have the increased income to pay for the higher cost. Further, all patrons of these establishments suffer from the price hike necessitated by a few pen strokes in congress.
It punishes skilled labor. Do you think they're going to raise everybody else's hourly wage to meet the wage hike? Not very likely. What'll happen is that most of the people that were making whatever they're talking about raising the minimum wage to will stay right where they're at. "Good morning, due to the incompetence of America's Socialist party, you now make minimum wage. No, you didn't get a pay-cut, your hourly rate is still the same. Thanks for coming into work. What's that? Um, no, sorry, we no longer have the budget to raise your salary as a Federal wage increase mandate has just eat up the majority of the company's profit. We're lucky to still be in business."
Bad for business
Small businesses (less than 500 employees) account for half of all private sector employment and more than half the economic output. -Bloomberg.com
Considering that roughly half of the people in the United States are currently working for small, private sector companies, what is the minimum wage increase going to do to potential new small business startups? Anyone? Will the increase of the minimum wage encourage or depress the development of new small businesses? Anyone? Will the increase hurt existing small businesses or force them to go out of business? Anyone?
Among all minimum wage workers, fifty-four per cent work in small businesses with fewer than 100 employees. Two-thirds work in businesses with fewer than 200 employees. Most small businesses are so close to bankruptcy as it is, a mandatory federal wage hike will push most of these companies over the edge. So, think about who is really benefiting from the minimum wage? A job is still better than no job.
A minimum wage hike will force companies to switch to automation as quickly as possible to save on employee costs. Why pay 20-30 low-skilled workers to pack widgets in a box when you can spend roughly what they make in a year on a machine that doesn't want a 401K match, doesn't need insurance, doesn't need sick time or vacation and produces consistent results without tiring. The problem with this is that most small businesses can't foot the bill for the necessary equipment on the front end and so will probably not start at all because they can't tread water paying human workers until they can save money in the budget for new equipment.
The inflation that will result, across the board, from the minimum wage hike will necessitate a pay raise from employees already making above the minimum wage to maintain their cost of living. It's cheaper to raise wages for a trained skilled worker than it is to hire a replacement and get them up to speed on the nuances of your location. Many businesses won't be able to afford to pay more money and will suffer for it by bleeding personnel to other companies who can afford the wage hike.
There are also hidden costs that will also plague small businesses that are able to handle the wage increases in their own companies. Hiring janitorial services (staffed with minimum wage employees) will cost more, or will have to be added to the duties of a current employee (who will want more money for it). Phone answering services, for catching customer calls out of business hours, are also usually staffed by minimum wage employees, so you can expect the cost of that service to go up. Package delivery costs will go up as warehouse employees are generally paid minimum wage. Costs will go up in every area imaginable due to the minimum wage increase and will impact the cost of doing business.
Class Envy
Once you explain that raising the minimum wage doesn't really give the worker more buying power, they don't care. "I'm sticking it to the man!" Sure you are buddy. These are the same people bitching about tax cuts for the rich. The top 50% of all income earners pay 96.54% of all income taxes. The top 1% pay more than a third: 34.27%.
I want you "stick it to the man" types to get this through your thick skulls. You are not risking anything personally to start up a business. You don't have to setup the utilities, pay the license fees, figure out your quarterly tax returns, startup a health-care and benefits business for your employees before you start the business part of the business. You have no personal risk involved in a low-skilled minimum wage job. If the company goes under, you'll just drive up the street and bitch about how poorly you're payed to be a clerk in a quickie-mart.
Why do you expect to be paid like you're the one who shouldered the risks involved with setting up and running a successful company?
"But Phil, how do you expect a family to survive on minimum wage (you heartless bastard)?" Short answer, I don't.
Long answer, minimum wage jobs are not meant to be your lifelong career. Minimum wage jobs are entry level positions, meaning literally, that anyone could do the job if they were given 10-15 minutes of instruction. If you go to McDonalds, you will see that they hire mentally retarded people to work there, a testament to the fact that there is not a lot of skill required in preparing the McDonald's menu. Running a cash register? It's not rocket science.
Now, if your goal is to manage a fast food restaurant, starting out flipping burgers and keeping the fries piping hot may be a stepping stone for you. If you take an entry level job to "put your time in" and get experience so that you can advance up the ladder, that's something else entirely. The don't pay McDonald's managers minimum wage. Depending on where you live, managing a fast food restaurant can be pretty good money.
The thing of it is, you no-talent, skill-less ass-clowns should stop your bitching if you bring absolutely nothing to the table and get five bucks and change an hour. You very easily could be replaced by someone with a mental deficiency and a sunny disposition.
The Working Poor
Raising the minimum wage is obviously a bad idea, but who are the working poor families who subsist on nothing more than the minimum wage? According to the 2005 Bureau of Labor statistics, the bulk of minimum wage workers are under 25 and have a limited education, meaning less than a third had a high school diploma or equivalent. Three-fifths worked only part-time and were students who lived in a household with high family incomes.
Of those on minimum wage over the age of 25, more than half work part-time jobs and have an average family income of $33,606 per year. Only 23% live in poverty while 45% have incomes over the poverty line. Out of all of those people, 6.1% are single parents working full time jobs.
Basically, according to Federal statistics, the best way to prevent from becoming one of the working poor is to graduate high school and work a full time job (35+ hours a week, even if that job only pays minimum wage). If you do decide to get married, you should stay married. Additionally, do not start popping out more kids than you can afford to clothe and feed. Gee, when it's put like that it sounds like all you have to do is strive to be better than trailer park trash and you have a good shot at not being poor.
Summation
The sad fact of the matter is, all of you skill-less people who are rooting for an increase in the minimum wage, more corporate taxes and higher taxes on the rich are voting your asses out of a job.
Half of all privately run companies are small businesses. A hike in the minimum wage is going to severely impact existing small businesses, most probably causing many of them to shut their doors. The larger food chains and retail stores are either going to start laying off a bunch of people or raise the cost of their goods and services. The ever-increasing taxes on corporations and the rich are going to result in big companies relocating overseas, less spending on high price items that keep most of the middle class employed and probably more layoffs.
Most importantly, the economy, much like your employers budget, is not static. A hike in the minimum wage is going to result in nationwide inflation making the value of that unearned pay increase virtually worthless. You will still not have a "living wage" but due to inflation and the impact on companies budget, unemployment will rise everywhere the minimum wage is paid.
You're cutting your own throats if you voted for this. I just wanted to make sure you were aware of it.
Posted by Philip McClure in Political Rants on December 01, 2006