The arguments against raising the minimum wage don't hold up to facts. Aren't most people who work for minimum wage teens? No-- 88 percent are adults, with more than a third over age 40. These workers earn half of their families' incomes. Meanwhile, the federal minimum wage has been stuck at $7.25 an hour since 2009. C'mon, you don't get an education, it's your own fault you work for minimum wage, right? Wrong. The percentage of low-wage workers with at least some college education spiked 71 percent since 1979, to 43.2 percent today. You didn't ask, but adult (re)training programs don't seem to help much. O.K., I feel for those people. But won't higher wages cause higher prices? The way you functionally subsidize companies paying low-wages to workers-- ponying up the difference between what McDonald's and others pay and what those workers need to live via taxpayer-paid SNAP (food stamps) and other benefits-- is a hidden cost in plain sight. You're already paying higher prices via higher taxes; you just may not know it. But even if taxes go down, won't companies pass on their higher labor costs? Maybe, but they are unlikely to be significant. For example, if McDonald's doubled the salaries of its employees to $14.50 an hour, not only would many of them go off public benefits, but so would the company-- and a Big Mac would cost just 68 cents more (another study says only 14 cents.) At Walmart, increasing wages to $12 per hour would cost the company only about one percent, so that made-in-China $10 item would run you all of $10.01. So maybe prices won't go up so much. But won't companies, facing higher labor costs, cut back on jobs? Companies hire for business needs, such as surge Christmas help, not out of societal largess. The Los Angeles Economic Round Table concluded raising the minimum to $15 locally, and thus putting more cash into the hands of consumers, would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. APaychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage. Nationwide, even a small hike to $10.10 an hour would put some $24 billion a year into workers' hands to spend and lift 4.6 million Americans out of poverty. Consumer spending drives 70 percent of our economy. What about small businesses? Two-thirds of all minimum wage workers are not employed by small businesses. Better yet, one survey shows three out of five small business owners favor raising the minimum wage; their profits depend on a strong local economy, which requires more money in local consumers' hands. Most small businesses cannot off-shore jobs, or export their way to profit, so micro-economics matter. Sad to say, 50-80 percent of most small businesses already fail for various reasons, even with a minimum wage that has not kept up with inflation (wage costs are actually lower now than in the past; in 1968 the federal minimum was $1.60 per hour, approximately $10.70 in 2013 dollars.) Factors other than labor costs seem far more significant. Don't these anti-minimum wage arguments sound a lot like the old anti-union arguments? Yep. Many opponents at the height of union employment in the 1970s claimed high wages cost jobs. How could a business survive paying $25 an hour? If wages were cut, they said, and profits went up as costs fell, more jobs would be created. The demise of unions did certainly help raise corporate profits, but it clearly did not create jobs, at least not jobs at a living wage. One in four U.S. employees are low-wage workers. That is 20 percent higher than in the United Kingdom, and the highest percentage among industrialized nations. So how'd that all anti-union stuff work out? If there are no clear arguments against raising the minimum wage from our perspective, why are companies so opposed? While wages have fallen, from 1978 to 2013, CEO compensation, inflation-adjusted,increased 937 percent. Funny how the two arguments to keep wages low, unions and minimum wage, track one another. It's almost as if there was a pattern of finding ways to lower wages while keeping CEO compensation high in America, societal costs be damned. But can't every statistic can be argued? Sure. However, at some point, assuming one seeks more than simply a hyper-wealthy dominating a working poor, economics is about people. People who can afford to feed themselves in meaningful jobs earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that often no longer believes in itself. Raising the wage so many Americans now depend on for their livelihood benefits us all. Peter Van Buren
What would be the effect on mid range hourly workers that are slightly more skilled but also have more stresfull jobs? If the min wage went to 12/hr that is great the people making 7.50 but what about the people already making 13 to 15/hr. How many would trade down to an easier job?
raising the min wage won't make one iota of a difference. Not to the unemployment rate, not to the economy, and not for the poor slob making min wage. It's just a useless exercise of taking money out of one pocket and putting it into the other pocket. You think your local C store or MCD is going to cut staff because the min wage is $10.10? They are already at bare min staff, and that's the way they always run. Raise the min wage now. It makes the liberals "feel" good. It just gets passed on to the consumer, including the min wage worker, and in a few years, the min wage worker is right back in the same shape he is now. Now, eliminating the min wage (like they do at Mexican restaurants where most of the workers are illegal) could make a huge difference. Suddenly, you would have doormen, delivery boys, water boys, janitors, street sweepers, security guards, night watchmen etc.
Hello dbphoenix: The Van Buren article artfully mixes facts and fantasy and arrives at the nonsense conclusion that raising the price of labor by raising the minimum wage will create more jobs and improve the economy. If raising the price of labor was truly beneficial for business then the minimum wage all businesses would be paying would be so far above the government’s minimum wage that there would be no one wanting the government to raise the minimum wage. But obviously that is not so. He quotes a survey saying “three out of five small business owners favor raising the minimum wage;”. Kind of sounds like businesses paying the minimum wage think the minimum wage should be raised. If that were so then again the minimum wage these businesses would be paying would be so far above the government’s minimum wage there would be no one wanting the government to raise the minimum wage. Did the survey cover businesses whose major labor costs were minimum wage workers ? No it did not. If minimum wage labor is a major cost of your business and the price was doubled how will will that effect your business ? Will it effect your employment, hiring, your plans for expansion, the price of you goods ? This survey is right out of the “How to Lie with Statistics” book. Here are some clear arguments against raising the minimum wage. 1. It does not create jobs it only outlaws jobs. It reduces the number of jobs that would be paid that are less than the minimum wage. So employment is decreased not increased. 2. By raising the cost of businesses paying the minimum wage it negatively effects their ability to employ and expand or even to stay in business. This reason should be obvious but apparently some people don’t realize that the cost of doing business effects the ability of businesses to stay in business. 3. Raising the minimum wage does not increase the productively of the minimum wage worker. It simply arbitrarily raises the price of labor. How can the government arbitrarily raising the price of labor reduce the cost of products or make the economy more productive ? It cannot. 4 If raising the minimum wage “benefits us all” as Van Buren claims then how can this happen if the price of goods are simply raised arbitrarily by the government and unemployment increases ? If there is no net improvement in the productivity of the minimum wage worker then how is the economy better off paying higher prices for goods and with more people out of work. 5. Since the productivity of the minimum wage worker has not improved then Van Buren’s statement in one of his examples about raising the minimum wage that it “would put some $24 billion a year into workers’ hands to spend and lift 4.6 million Americans out of poverty.” is just nonsense. Some how in his simple model of the economy, he thinks by taking money out of some one’s pocket and sticking it in some one elses pocket we are all better off. But economies are not static they are dynamic and complex, and what works on his computer software financial spreadsheet will not necessarily work in real life. There is a law called the law of unintended consequences and while his spreadsheet may say free prosperity for all, the businesses who actually employ these people will see another reality. 6. One of his references says “Minimum wage increases stimulate the economy by increasing consumer spending, without adding to state and federal budget deficits. Consumer spending drives 70 percent of the economy, and increasing demand is key for jumpstarting production and re-hiring. A raise in the minimum wage puts money into the pockets of low-income consumers, who immediately spend it at local businesses.” http://www.raisetheminimumwage.com/pages/qanda If the above were really true that raising the minimum wage is needed because “increasing demand is key for jumpstarting production and re-hiring.” then why not raise the minimum wage to $ 100,000/year. Why not indeed ? Wouldn’t it be great if we were all paid at least a $ 100,000/year. I like Rothbard’s answer to that question: “The advocates of the minimum wage and its periodic boosting reply that all this is scare talk and that minimum wage rates do not and never have caused any unemployment. The proper riposte is to raise them one better; all right, if the minimum wage is such a wonderful anti-poverty measure, and can have no unemployment-raising effects, why are you such pikers? Why you are helping the working poor by such piddling amounts? Why stop at $4.55 an hour? Why not $10 an hour? $100? $1,000? It is obvious that the minimum wage advocates do not pursue their own logic, because if they push it to such heights, virtually the entire labor force will be disemployed. In short, you can have as much unemployment as you want, simply by pushing the legally minimum wage high enough.” Outlawing Jobs: The Minimum Wage Friday, February 15, 2013 by Murray N. Rothbard https://mises.org/daily/6367/Outlawing-Jobs-The-Minimum-Wage ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… Socialist wealth redistribution schemes, printing money to stimulate the economy, eg quantitative easing, raising taxes to reduce income inequality, raising the minimum wage. All of these ideas are wrong. How can our country compete with other countries economically when the only solutions our president’s has are all of the above ? Why would businesses want to locate in a country with high taxes and high labor costs ? Instead of making our country more attractive to businesses, he is doing the opposite. The problem facing our country is not that the Federal Reserve hasn’t printed enough money or that the minimum wage is not high enough it is a problem of productivity. A problem best solved by a free market and low taxes. Businesses produce wealth not governments. Governments consume and redistribute wealth. They do not produce wealth. What kind of country are we becoming as our labor costs become too high and the skills and educational level of our workers becomes too low compared to the rest of the world. Sounds like a race to the bottom. And from Henry Hazlitt: “The real problems facing our economy cannot be fixed by the government arbitrarily raising the price of labor but by improving the productivity of the economy. We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces. The best way to raise wages, therefore, is to raise labor productivity.” See Economics in One Lesson by Henry Hazlitt, p 118 http://mises.org/books/economics_in_one_lesson_hazlitt.pdf Anubis More references …………………………………………………. $15 minimum wage for fast food workers? Here's what it means for living wages, food prices and jobs Monday, June 02, 2014 by Mike Adams, the Health Ranger http://www.naturalnews.com/045403_minimum_wage_fast_food_workers_job_skills.html ...The critical error progressives often make in these situations is in thinking that hiking wages among low-wage workers will only have positive repercussions, not negative ones. In the real world, however, rising minimum wages almost always translates into job losses for the very workers who need those jobs the most. Thin profit margins in the fast food sector Nowhere is this more true than in the food service industry, where profit margins are razor thin for restaurant owners. The gap in the thinking on this comes from those who see fast food companies as billion-dollar corporations (which is true) but fail to understand that local restaurants are locally owned and operated at very thin profit margins. Most fast food restaurants pocket less than 2% of their total revenues in profit, and labor costs are a substantial portion of their overall operating costs. If those labor costs are suddenly doubled due to mandatory minimum wages of $15, then one of two things has to take place: 1) The restaurant must raise its prices in order to survive (or go bankrupt). 2) The restaurant must fire some of its workers and ask the remaining workers to do more work ...................................................... Why rising inflation threatens America's middle class By Peter Morici, Published June 17, 2014 http://www.foxnews.com/opinion/2014...eatens-america-middle-class/?intcmp=obnetwork 5. A Higher Minimum Wage Will Only Make Matters Worse The Congressional Budget Office estimates that the president’s proposal to increase the minimum wage will destroy up to 1 million jobs. .............................................................................................................. Economics in One Lesson by Henry Hazlitt, p 116 It may be thought that if the (minimum wage) law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry will be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way.
McDonald's in Europe has already introduced kiosks where you place your order through the computer and then the cook sees it and processes it. The kiosk can accept credit cards and cash like automated checkout in grocery stores. These machines can replace the cashiers, so maybe 3 workers a shift or so. I'm not happy about it but I can see McDonald's and other fast food companies introducing these machines if minimum wage goes up a lot. They might be doing experimental introductions in Ohio. Either way, fast food is crap and should be eaten sparingly.
This is the question I find myself asking when this discussion comes up. Raising the minimum wage really won't make a difference because we know that skilled workers aren't gonna stand for a burger flipper making damn near the same as him, so they're going to demand higher wages as well. Don't think that companies are gonna just eat the cost, either. So in the end, we'll end up right where we are now...just at a higher price.
like the man said, like most liberal economic solutions, it's just taking money out of one pocket and putting it in the other, meanwhile greasing the palms of the government who take a cut of everything in "administration" costs. So we all end up a little poorer while "they" end up a little richer.