In a recent Democratic presidential debate, former Secretary of State Hillary Clinton and Sen. [score]Bernard Sanders[/score] outdid themselves by trying to prove who cares more about a $15/hr minimum wage.
Contrary to popular socialist belief, businesses, especially small ones, do not have a stockpile of cash to draw from if wages suddenly skyrocket. I worked for two small mom and pop businesses and learned very quickly of the sacrifices the owners had to make to keep themselves alive from month to month. Many small business owners actually reduce their own pay, or sometimes don’t pay themselves at all, just to meet their already depleted payroll.
The two most common arguments against a $15/hr minimum wage are, it will:
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1) cost jobs and
2) raise prices.
These are both absolutely correct. There is a third one, though, that I have not heard discussed, which directly impacts everyone earning higher wages in upper-level positions.
If $15/hr becomes the national minimum wage, it could quickly become the only wage.
Employers will need extra revenue to fulfill the minimum wage requirement. Other than raising prices, their next option is to find revenue from current employees. This means no raises. The money just won’t be there. This also means that if their financial situation gets bad enough, either their higher wage earners’ salaries will be reduced– or eliminated. Firing higher earning employees enables small business owners to hire someone else at a lower rate. And, sadly, this business model enables no one the opportunity to get ahead, because there will be absolutely nowhere to go.
Minimum wage increases will negatively affect existing jobs and salaries, and the overall economy will suffer.
Many who support the increase argue it will automatically force all wages to go up. When asked about jobs that require higher skills and education, an Arizona protester and fast food worker said, “All the minimum wage goes up. With my income increasing, everybody else’s will increase.” She added, “They (businesses) don’t want to pay $8 an hour.”
This is spoken by a person who likely has no idea how businesses function, convinced they are greedy, just sitting on a pile of extra cash refusing to share it with employees.
For argument’s sake, let’s agree her analysis is correct. The only way for wages to increase is if prices also increase. It’s that simple.
Then, we can welcome skyrocketing inflation. With inflation, the pay increase becomes worthless because the cost of living also increased by the same, or even higher, rate. People will be poorer than they ever were before.
This is Economics 101, folks.
But in reality, backed up by history, there is no guarantee– or even evidence– that all wages will go up. If businesses want to stay open and keep affordable prices, wages won’t (can’t) change.
Let’s say that an employee has been coming in early and staying late, producing excellent results. She’s already at the minimum but her employer wants to give her a raise for her hard work.
However, because of the new regulations, the employer is forced to increase another employee’s pay to meet the new minimum wage.
But the employer only has the funds to choose between one or the other. Which employee will it be? Most likely, the lesser costly employee, which punishes the hard-working, diligent employee who deserves more than the minimum wage.
It won’t take long for the hard-working employee to realize that the other employee, who might come in late and take much longer to perform his job, earns the same amount of income as she does. Realizing her hard work isn’t getting her ahead, her ambition and initiative will soon diminish.
The fairness Clinton and Sanders are fighting so hard for results in dumbing down hard workers, by bringing up the less deserving because they are less costly.
Eventually, any employee might realize that he/she can give up the pressures and anxiety-ridden desk job– by finding work at the nearest fast food restaurant getting paid the same amount of money for less work. These employees might regret the years spent at college, earning a degree that provided no professional or financial benefit. They might encourage their children to save their time and money, ignore their dreams and goals, and find a simple, no pressure, minimum wage job.
At this point, Democrats will have achieved “Equality of Mediocrity.”
No one gets ahead.
No one achieves more than anyone else.
No one’s feelings get hurt because “he makes more money than I do.”
Minimum wage is the communist utopian’s dream that every progressive politician wants.
It’s also been noted that some small business managers don’t currently make $15/hr, including many first responders who earn less.
The question of fairness then becomes who judges the value of income and work. Does the person who asks, “Do you want fries with that,” deserve better pay than someone who helps saves lives? On the flip side, why train to work for a very high-pressured job, like EMS, if a cashier with far less skills earns more?
Employees can expect Christmas bonuses, gifts and/or parties at the end of the year to be gone. No extra funds will exist to reward employees, period. Automatic pay raises will be canceled, replaced by wage freezes and/or a reduction in staff. This is the cost of Utopia. Is it worth it?
To those pushing the new minimum wage, their taxes will go up because they will be responsible for helping to financially support everyone who lost their jobs because of the wage increase. Clinton and Sanders have promised it.
Basically, taxes and increased costs will deplete any “raises” actually received. As a result, one person stays at home watching Netflix while one person works to cover two peoples’ job responsibilities for the same, or even less income.
The bright side is, we will all, at least, be equally poor.
But that’s just my 2 cents.