Why Most Debates Abut the Minimum Wage are Bullshit
Should we raise the minimum wage? If we raised it a bit, maybe a dollar, I think few people would have a problem. Maybe some republicans, a few libertarians would complain, but, for the most part, a small raise wouldn't be a bad thing. However, since we're talking about it, why not a much bigger raise, how about a ten dollar an hour minimum wage, possibly, even fifteen dollars an hour. Everybody would have more money, people would spend, and it would help the economy. Right?
Why stop there? Why not raise it to twenty dollars an hour! That would give everyone a living wage. In fact, why not raise it even further. How about a twenty five dollar an hour minimum wage. This is where people start to get uncomfortable. “Don't be ridiculous!” they say “Now, you've gone too far!” But, if the issue is just about passing a law to give working people more, why not?
Generally, people stop at fifteen dollars an hour, based on the notion that people doing low skilled labor might be making more than they are. So, they'd need a hefty raise too. “We don't want to be unfair, now, do we!” It also probably helps that $15.00 an hour has been thrown around so much in the media that the number has gained a certain acceptance.
I've had this conversation with many educated people—some with Masters degrees, even doctorates—and it's amazing how few people, even highly educated ones, are clueless about how an employer arrives at what wage to pay. They simply look at billion dollar corporation like McDonald’s and argue that they're just being greedy. “Spread the wealth around!” they say “Those greedy bastards!”
This simple formula is offered by lot's of well-meaning people, including many politicians—our president being the best example. They seem to believe that it's just a question of doing the right thing! And, since businessmen are apparently unscrupulous capitalists, someone, somewhere must be willing to speak for the common-folk—someone like them—the enlightened politicians.
Here's the real problem; most people don't work for billion dollar corporations. Somewhere between 5o% to 70% of the nation work for mom and pop businesses. Those same small businesses fail at a staggering rate, 80% are out of business in the first year, 90% in the second. Now imagine the effect this would have on the many businesses that are struggling just to keep their doors open, if they were forced to pay 30% to 50% more for they're employess? The fact that we're in the worst recession since the great depression makes things worse, yet again.
Does this question really need an answer, beyond the obvious one!
Even in the case of billion dollar corporations, their profit margins are a good deal smaller than one might think. Those billions in profits that reporters love to write about, are in fact, spread around their many stock holders, including millions of small share holders who rely on these companies for their meager retirement—grandma and grandpa included. Companies would likely deal with the substantial labor hike by raising their prices, passing the cost along to the public. That would mean inflation across the board. When things cost more, people's hard earned money buys less. In reality, you didn't get a raise, you simply got a bit more money, that now has less value. Other companies would simply automate, thereby eliminating, or substantially reducing their costs. And, in the end, this desire to help the working poor would put even more people out of work. It would have the unintended consequence of reducing employment among low skilled, inexperienced workers, especially among the young, where unemployment is already at all-time highs. For young black males that number is currently about 30%. That's higher than unemployment levels at the very worst parts of the great depression.
No, the real problem is, that the economy sucks—big time, in fact. It sucks, in no small part because government regulation and paper work is far greater today than it was fifty years ago. That would be one very big reason. The more that government creates costly mandates out of thin air, the more those same mandates slow the economy, like so many regulatory speed bumps in the road. That is inevitable.
In the 1950s 1 in 20 workers were government regulated. Today, that number is 1 in 3. We also have the highest corporate tax rate in the industrialized world. The capital gains tax was recently raised as well, which punishes investment, hurting everyone—including people who inherited a small sum from a parents will—to those businesses needing reserves of capital so they can continue to grow.
Why stop there? Why not raise it to twenty dollars an hour! That would give everyone a living wage. In fact, why not raise it even further. How about a twenty five dollar an hour minimum wage. This is where people start to get uncomfortable. “Don't be ridiculous!” they say “Now, you've gone too far!” But, if the issue is just about passing a law to give working people more, why not?
Generally, people stop at fifteen dollars an hour, based on the notion that people doing low skilled labor might be making more than they are. So, they'd need a hefty raise too. “We don't want to be unfair, now, do we!” It also probably helps that $15.00 an hour has been thrown around so much in the media that the number has gained a certain acceptance.
I've had this conversation with many educated people—some with Masters degrees, even doctorates—and it's amazing how few people, even highly educated ones, are clueless about how an employer arrives at what wage to pay. They simply look at billion dollar corporation like McDonald’s and argue that they're just being greedy. “Spread the wealth around!” they say “Those greedy bastards!”
This simple formula is offered by lot's of well-meaning people, including many politicians—our president being the best example. They seem to believe that it's just a question of doing the right thing! And, since businessmen are apparently unscrupulous capitalists, someone, somewhere must be willing to speak for the common-folk—someone like them—the enlightened politicians.
Here's the real problem; most people don't work for billion dollar corporations. Somewhere between 5o% to 70% of the nation work for mom and pop businesses. Those same small businesses fail at a staggering rate, 80% are out of business in the first year, 90% in the second. Now imagine the effect this would have on the many businesses that are struggling just to keep their doors open, if they were forced to pay 30% to 50% more for they're employess? The fact that we're in the worst recession since the great depression makes things worse, yet again.
Does this question really need an answer, beyond the obvious one!
Even in the case of billion dollar corporations, their profit margins are a good deal smaller than one might think. Those billions in profits that reporters love to write about, are in fact, spread around their many stock holders, including millions of small share holders who rely on these companies for their meager retirement—grandma and grandpa included. Companies would likely deal with the substantial labor hike by raising their prices, passing the cost along to the public. That would mean inflation across the board. When things cost more, people's hard earned money buys less. In reality, you didn't get a raise, you simply got a bit more money, that now has less value. Other companies would simply automate, thereby eliminating, or substantially reducing their costs. And, in the end, this desire to help the working poor would put even more people out of work. It would have the unintended consequence of reducing employment among low skilled, inexperienced workers, especially among the young, where unemployment is already at all-time highs. For young black males that number is currently about 30%. That's higher than unemployment levels at the very worst parts of the great depression.
No, the real problem is, that the economy sucks—big time, in fact. It sucks, in no small part because government regulation and paper work is far greater today than it was fifty years ago. That would be one very big reason. The more that government creates costly mandates out of thin air, the more those same mandates slow the economy, like so many regulatory speed bumps in the road. That is inevitable.
In the 1950s 1 in 20 workers were government regulated. Today, that number is 1 in 3. We also have the highest corporate tax rate in the industrialized world. The capital gains tax was recently raised as well, which punishes investment, hurting everyone—including people who inherited a small sum from a parents will—to those businesses needing reserves of capital so they can continue to grow.
CEOs making huge salaries, with severance packages that would make Solomon blush, are statistical anomalies, so small they don't register a blip on the economic radar. This make for compelling propaganda, however. In politics, you always need a bad guy. Why not greedy businessmen, frequently defined as greedy for no reason greater than desiring to make a profit.
Here's the simple truth, wages rise when the demand for the things produced and sold in the marketplace increases. Then, the demand for the labor used to produce it, or sell it, increases as well. In other words, when business is good, companies pay more, hire more and expand and grow. That’s when a boss is generally happy to give you a raise, because he's also getting a raise. And then everyone's happy.
Why is this true, even if your boss really is a greedy jerk? Because he or she can't run their business alone, they need you. In a healthy economy you can take your skills someplace else, where the boss isn't a jerk. And, for one simple reason, because your labor is in demand. In a truly free market the right people generally win and the wrong ones lose.
Make no mistake, there will always be powerful rich people who will take advantage if they can, poor ones too. In a free market, however, that is much harder to do. It's when rich businessmen can get politicians to enact laws to protect them from competition that problems arise. Why? Because the market is no longer free—and then everyone suffers—leaving what is essentially a monopoly in it's place. Of course, this may only apply to workers who've made themselves valuable by being good employees. Not when some politicians arbitrarily says they need a raise, regardless of their productivity. But, when the economy is good. And it hasn't really been good for a long time.
Why has the economy been so unproductive? Is it because of greedy businessmen?
There are lots of reasons, too many to write about without a much, much longer article. The simplest answer is; the economy was, and continues to be, heavily manipulated by cronyism between private banking interests, primarily the Federal Reserve, and the government—this includes both republicans and democrats. Inevitably, the same cronyism that created the Dot. Com bubble of the 1990s, led to the housing bubble of 2007 and beyond—and continues to wreaks havoc throughout every part of the economy.
Let me be clear, this isn't capitalism, it is cronyism, which is really socialism for favored business interests. That kind of favoritism can only come from government. It is government alone that has the necessary power to bestow such gifts, paid for by the American taxpayer in the form of higher taxes and higher prices on everything—driving unemployment higher as well.
The answer for this problem isn't more socialism. Or, socialism for everybody “Hey, if it's good enough for billionaires, it's good enough for me!” Hardly! Just because some people drink poison, doesn't mean everyone should.
No, it's because of greedy politicians and ignorant, if well-meaning voters buying the latest line of self-serving propaganda from their would-be political benefactors. In the end, the arguments never really change. Why change what works? If it was just the people who believe this nonsense who lost their jobs, it would be one thing, but that’s never the case. At least then, there would be a-kind-of justice. It may not be the justice they desired, but it would be the justice they deserved.
Mark Magula
Here's the simple truth, wages rise when the demand for the things produced and sold in the marketplace increases. Then, the demand for the labor used to produce it, or sell it, increases as well. In other words, when business is good, companies pay more, hire more and expand and grow. That’s when a boss is generally happy to give you a raise, because he's also getting a raise. And then everyone's happy.
Why is this true, even if your boss really is a greedy jerk? Because he or she can't run their business alone, they need you. In a healthy economy you can take your skills someplace else, where the boss isn't a jerk. And, for one simple reason, because your labor is in demand. In a truly free market the right people generally win and the wrong ones lose.
Make no mistake, there will always be powerful rich people who will take advantage if they can, poor ones too. In a free market, however, that is much harder to do. It's when rich businessmen can get politicians to enact laws to protect them from competition that problems arise. Why? Because the market is no longer free—and then everyone suffers—leaving what is essentially a monopoly in it's place. Of course, this may only apply to workers who've made themselves valuable by being good employees. Not when some politicians arbitrarily says they need a raise, regardless of their productivity. But, when the economy is good. And it hasn't really been good for a long time.
Why has the economy been so unproductive? Is it because of greedy businessmen?
There are lots of reasons, too many to write about without a much, much longer article. The simplest answer is; the economy was, and continues to be, heavily manipulated by cronyism between private banking interests, primarily the Federal Reserve, and the government—this includes both republicans and democrats. Inevitably, the same cronyism that created the Dot. Com bubble of the 1990s, led to the housing bubble of 2007 and beyond—and continues to wreaks havoc throughout every part of the economy.
Let me be clear, this isn't capitalism, it is cronyism, which is really socialism for favored business interests. That kind of favoritism can only come from government. It is government alone that has the necessary power to bestow such gifts, paid for by the American taxpayer in the form of higher taxes and higher prices on everything—driving unemployment higher as well.
The answer for this problem isn't more socialism. Or, socialism for everybody “Hey, if it's good enough for billionaires, it's good enough for me!” Hardly! Just because some people drink poison, doesn't mean everyone should.
No, it's because of greedy politicians and ignorant, if well-meaning voters buying the latest line of self-serving propaganda from their would-be political benefactors. In the end, the arguments never really change. Why change what works? If it was just the people who believe this nonsense who lost their jobs, it would be one thing, but that’s never the case. At least then, there would be a-kind-of justice. It may not be the justice they desired, but it would be the justice they deserved.
Mark Magula