Beyond the Cusp

February 8, 2017

The Coming Destructions of the $15 Minimum Wage

 

There are a number of Democrat run and owned cities which feel they have found the solution to poverty caused by those working merely for the paltry $7.25 per hour; the new dawning of the $15 per hour minimum wage. These cities see no problem with doubling their minimum wage and believe that the businesses, such as burger and other fast food restaurants and retail shops will have no choice as they will be unable to move from the city. They have missed another alternative that those unable to move beyond the city limits will face, total disappearance as they find it impossible to sell their merchandise at the inflated price required to pay their remaining help the overly inflated salaries. Where the minimum acceptable wage is already around $10 per hour the increase will still cause hardships for the retailers and manufacturers. Their higher priced goods will cause financial distress for those residing within the city limits without the means to get to the suburbs where the prices will actually be lower. Even the real estate will lose value as it becomes more difficult to rent their retail and manufacturing spaces and the cities slowly fall into disrepair as the people find they have little if any choice but to leave the city. With what jobs currently exist being initially cut just to remain viable, the economic base for these cities will be cut from under them. The loss of jobs will lead to decreased business which will again lead to more job loss in a slow death spiral. These cities will slowly turn into husks collapsing under their bureaucratic foolishness. They are signing their death warrant in their misguided attempt to right a nonexistent wrong.

 

When I first entered the job market the minimum wage was all of $1.25 per hour; yet nowhere in the entire area around the city where I resided could one find a job at that wage. The minimum wage by 1975 had risen to the unbelievable heights of $2.00 per hour and even that was not high enough to affect work in my home city. The reason was simple, nobody would accept such a wage nor could any employer find workers even for digging ditches at such a wage. My first job was washing dishes at a diner which paid more than $1.50 and was among the lowest paying of jobs. As it turned out I was a poor dishwasher and was fired within the first few weeks. From there I found work stocking shelves at a chain shoe store which paid even more and eventually became a commissioned sales person where minimum wage never became a consideration. Still, even friends who took construction work actually digging ditches or, as I did one summer, building railroad tie walls in a new community development were paid well above minimum wage. I know that across the nation there were many places where the minimum wage was the guideline for minimum wages of employment but that was always a starting salary. Anybody working at a minimum wage who was still making the minimum wage within six months or a year was usually soon to be seeking a different line of work as they were not up to par. Minimum wage was a test salary which was offered largely as one learned how to work at their chosen job and once they proved proficiency their salary would rise above that minimum rate. This fact was one of the truths I found wherever I moved was that any employee worth their salt made minimum wage only for the shortest of periods and once they proved their worth they received a more decent wage. Are there those who make minimum wage to start and will continue making that level no matter how hard they work? Yes, but these are a very small minority and few of them are raising a family on their salary. Those who only make minimum wage for extended periods of time will not benefit from a $15 per hour minimum wage as those will be the first people who will be let go. Often those making minimum wage for prolonged periods of time often are kept on the payroll not because they are price efficient but because their employers realize they are doing the best they are able and they remain employed more for spiritual or social reasons than economic ones.

 

History of the National Federal Wage Rate

 

The reality is the world is a hard and cruel place with little sentiment, though fortunately there is more sentiment just not in the workplace. In the workplace every salaried individual must fulfill a simple parameter; they must make more money for their employer than their employer pays them. Businesses are not for generosity or charity, even those in the business of charity as even they must show a profit for every employee. Their secret is the majority of their employees are largely volunteers and thus can easily take in more than they cost. Businesses need to make a profit or they serve no purpose and would soon go out of business without a profit margin. Let us take an example of a business which makes exactly the money as it pays out in salaries. How long would the owner and his family survive if this was the case? Owners only receive a salary from profits after all expenses are paid and thus employees must make more than they cost or the owner has no reason to remain open. Further, what is the owner to do when the rent for the store space comes due, the water and electric bills, the gas bill, taxes on the property and on sales, and how do they pay for the insurances for their employees such as medical (Obamacare does not come cheaply to the average business) and unemployment and payroll taxes etc. And then there are the other incidentals an employer has such as the Christmas party and cupcakes for employee birthdays and of course meals for their own family. If it is a large company then there may be stockholders who also demand profits otherwise they will take their investment capital elsewhere.

 

These are the most basic of reasons that the $15 per hour minimum wage is going to bust many of the cities employing it. There are probably a select few cities such as San Francisco, New York, Los Angeles, Washington D.C., Chicago and a maybe others where the minimum employable wage, not the minimum wage but for that location it acts as the minimum wage, is already over $15 per hour. These cities could make the empty statement that they are raising their minimum wage to $15 per hour knowing that virtually every employer, especially their main employers, already are paying $16, $17, $18 or even more just to find worthy candidates to fill their positions. The problem with their taking their minimum wage above the national average is it places an upward pressure on smaller and less affluent cities to follow suit when their economic situations cannot support such a wage scale. It is all well a good for the major cities where there are no shortages of employable people compared to the job base to make offers to raise their minimum wage to less than the going rate as they and their employers will not suffer. But as this is not about their minimum wage, it is about making a case to raise the Federal minimum wage to $15 per hour, which the Democrat Party has been pushing, which would have disastrous results especially for rural neighborhoods and farm laborers. Small towns would find the higher prices near impossible for families to meet and employers would run their businesses as lean as humanly possible possibly leaving numerous former employees unemployed. These communities would soon be faced with taking their economies off the grid, so to speak. They would most likely turn to a barter system which is untaxable and makes things relative and neutralizes the minimum wage as what is the worth of bushels of wheat in exchange for a new roof on the barn? Soon these communities would drive out any competitors who could not accept bartered goods such as the chain stores which run only on dollars and cents. No, the $15 per hour minimum wage argument is mostly being pushed in Democrat controlled major cities such as Seattle, where their Federal Court Judge heard a case and has attempted to nullify President Trump’s immigration vetting delay from terror ridden nations. These cities already have virtual minimum wages well above that $15 per hour and thus are only going to hurt small Mom and Pop stores and other smaller enterprises or workplaces with low profit margins such as miniature golf courses, etc. The whole reason behind the minimum wage argument is to give false hope to young employees who see such a higher minimum wage as their salvations not realizing that it will only bring about a bout of inflation until the new minimum wage will be equal in buying power to the present minimum wage and will only result in the American worker becoming more expensive and thus chase more jobs overseas. This is a bad argument and can only harm America, but what do the politicians care if they can garner a few extra votes in November?

 

Beyond the Cusp

 

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