Tuesday, June 24, 2014

Obama wants to raise the minimum wage...

Congressional Budget Office released a report stating that raising the minimum wage from $7.25 to $10.10 would help bring 900,000 people above the poverty level–at a loss of over 500,000 American jobs by 2016.

As a group, workers with increased earnings would pay more in taxes and receive less in federal benefits of certain types than they would have otherwise. However, people who became jobless because of the minimum-wage increase, business owners, and consumers facing higher prices would see a reduction in real income and would collectively pay less in taxes and receive more in federal benefits than they would have otherwise.

But, but, but it FEELS right to raise the minimum wage! Even though economists have stated that increasing the minimum wage will cost jobs, raise prices and increase government assistance outlays this NEEDS TO BE DONE because we have to do something!

Never mind that the something to do is never less government or less regulations so that business can create more and better paying jobs.

If raising the minimum wage was as simple as simple passing a law, why stop at raising the minimum wage to $10.10? Why not raise it to $20 or $30 or even $40 an hour? If (as liberals think) there is no cost to raising the minimum wage, that the only reason businesses pay minimum wage is due to greed, then really raise it. Raise it to $50 per hour. They won't do that though because if you say that, even a liberal understands that raising the minimum to $50 is ridiculous. They are just unable, intellectually to apply that same thought process to smaller rate increases. The get the absurdity of it but don't really (nor want to) understand why that is.

A business will pay its workers the minimum it can get away with while ensuring that it gets workers of sufficient quality to maintain the business at the desired level of production / quality. The more skilled the employees need to be and the more rare those skills are, the higher the wages need to be to get and retain that level of employee. Nuclear power plant technicians make more than burger flippers because the skill set needed to be the technician is far greater than the burger flipper and the pool of available employees is greater for the burger flipper. Forcing the employer to artificially pay more for the burger flipper than he or she is worth is a waste of money that would otherwise be allocated more efficiently. This is money that is not spent on hiring additional employees, upgrading equipment, paying more skilled workers more money to retain them or increased profits that go to the business owner or stockholders resulting in those stakeholders being able to increase their own savings or spending.

This is basic economics. That this reality is ignored by our elected representatives demonstrates a critical ignorance of economics and business reality in our political class or a crass moral outlook that places political expedience ahead of the actual welfare of the citizens of this country. I am afraid that these possibilities are not mutually exclusive.

No comments:

Post a Comment