Perusing the progressive social media pages is depressing. In the last 2 weeks I have seen so many posts, blogs and comments about how minimum skill jobs, that are meant to be temporary in the first place, deserve maximum pay so that employees everywhere can enjoy a higher standard of living. There is so much wrong with this mindset! Here are the 5 main problems when it comes to raising the minimum wage to a “living wage” level.
1. Minimum skill will ALWAYS be compensated with the lowest possible wage.
If a McDonald’s cashier and a marketing manager for a small company are both making $15 an hour (the equivalent of $30K per year), the marketing manager position will demand a higher wage in order to be in proportion with the skill level. That causes the minimum skill set employees to STILL be making the lowest available wage. You see, the problem with allowing the government to step in and set a minimum wage instead of allowing the free market to help decide this number, is that many of the larger companies default to the government required minimum pay instead of paying a higher hourly wage to compete for the dependable workers for these low skill positions. If I am told that I MUST pay a minimum of $9 or $12 or $15 an hour, I, as a CFO of a company will recommend that we default to that number. If McDonalds’s and Burger King are both competing for workers, and there is no minimum wage, then they are setting the hourly rates and will have to pay what the market demands, rather than what the government dictates.
2. Raising minimum wage demands increases for higher skilled workers to be compensated appropriately. This in turn leads to inflation and higher prices on daily necessities.
If John Doe makes $15 an hour, and that in turn pushes everyone’s wages higher, then the money is worth less than it used to be and prices go up. You might now enjoy $.99 eggs, however, with a government dictated $15 an hour price tag on low skill employees, that $.99 dozen egg price will quickly rise to $1.99 or higher. Paper money has NOTHING backing it. No more gold standard. The only thing backing it currently is the full faith and confidence of the US government. The Congressional approval rating is in the single digits. You do the math.
3. Raising the minimum wage has a capping effect on those who actually work hard and deserve more.
If an employer is forced to pay more for those who do less, and he has a payroll level that will allow him to still make a profit, he is not going to increase said payroll to an amount where he loses money. Raising the minimum wage will destroy many companies upward mobility scales and cause many who should make more, to simply not make more. Now for many that have been fed the class warfare line since their youth, this might sound “fair”. It also, however, sounds a lot like socialism and, much like every other time socialism has been tried, it will inevitably fail. Workers who deserve more, will simply become entrepreneurs. They will leave their places of employment leaving the business owner with overpriced, low skill workers and absolutely no customer service or innovation.
4. Raising the minimum wage will cause minimum skill employees to lose their jobs in favor of automation.
This is already coming. These fast food workers who are “striking” don’t understand that they already cost their employers way more than just automating their position would. When faced with doubling the employees wage, or investing in innovation to improve efficiency and decrease costs, the employer, if they are smart, will choose innovation. In a BEST case scenario, raising the minimum wage to $15 an hour will cause workforces to shrink drastically and the skeleton crews that are left will have their work loads doubled to compensate for the higher payroll outlay. ANY WAY you look at this, the group who thinks they are going to benefit is actually the group that will be losing the most.
5. When you match an over inflated minimum wage with record level illegal immigration, you get many US citizens who normally would have been able to find work, in the unemployment line.
When all of the illegal immigrants are granted amnesty that Obama has illegally initiated, there will be a FLOOD of workers that are willing to be paid less for the jobs we are currently as a nation whining about the pay levels for. This will increase competition for these minimum skill jobs and cause many who otherwise would have been employed to become solely dependent on the government for everything in their lives, from sunrise to sunset, and will effectively lock them into a permanent underclass in our nation. A company only has so much money to pay employees before they start losing money and are forced to close their doors. There is only so much money in our system right now that citizens have for purchasing items. You will get to a point where the companies are paying money to staff their locations and the usual patrons of these stores won’t have any more money to spend. This is where stores close. The $9 an hour job starts to look pretty good when you have no income and no way to take care of your family and no real way to work harder and make more. The American dream of equal opportunity is squashed in favor of the progressive dream of government dependency from cradle to grave.
So, I beg all of you who are fighting for minimum wage increases to change your focus. Start fighting for the abolishment of government mandated wages! Start fighting for the free market to reign supreme and a funny thing will start to happen. The wages you currently are protesting in the streets for, will be there with no government strings attached. Sounds like the best of both worlds to me.