This may seem very Republican of me though I am a registered Democrat, but this minimum wage thing seems to bother me just a little. The new minimum wage in California is something like $6.25 per hour. I don’t know the actual rate, but it is somewhere around there. I support the right of people to make a good living and get paid a reasonable amount for what they do. Service oriented employees deserve much more recognition than they receive. We saw strikes from the janitor’s unions last year. These people work hard and deserve something for what they do. Something still seems wrong with a continual minimum wage increase.
Looking at it from the manufacturing side, if I was forced to pay my minimum wage employees more money due to a rate increase, I would want to recuperate some of my profits. Now there are many ways to offset the rate increase. Cut my staff. That’s a real popular choice in many businesses. Cut my spending on supplies, another popular way to cut expenses. I would even increase the price of my merchandise.
What happens when I increase my price? It offsets the minimum wage! Now the whole thing is a wash. People now have to pay more for the service or the goods. They make more money, but now they spend more for it. Net gain is zero. A local car wash has already shown signs of price increases due to them having to pay higher wages. Customers may pay those rates or move on and get their car washed elsewhere. The next car wash they go to has increased their prices, too. Now it is a matter of whether they want their car washed or not. Smaller businesses theoretically could go out of business due to the minimum wage increase. People will have to pay more for goods and services. Net gain equals zero. On paper we look like a rich nation. People get more money here. In reality we are just like everyone else, we just pay more for it.
I cannot see any advantage to the continual attempt to better minimum wage employees by increasing that minimum. Rich people do not want the gap narrowed between them and the lower classes, so they are going to do whatever they can to stabilize and maintain the separation between rich and poor. As for the middle class salaried employees, they will not see any advantage as they are now pushed closer to the poverty level creating a larger gap between the rich and the rest of us. Middle class employees that are salaried get cost of living raises which helps offset some of these changes and the minimum wage employee does not see this. That is an advantage to having the minimum increased, but even so, we see that cycle start again. Wage increases, goods and services increase, net gain zero.
If you want something made in America, then you are really going to pay for it. There is no slave labor here. Prices of goods and services will be expensive. Now you know why the United States has such a trade deficit. We import so much inexpensive items so we can afford them, but we cannot export anything because it costs way too much to be purchased. It seems like a vicious cycle. Never ending. Equality among workers seems to be out of reach. I do not know where this will lead, but I know it will be interesting to see if my theory that the prices of goods and services will increase do to the minimum wage increase is proven. I am going to watch and see.
The Effects of Minimum Wage on Employment
by Marvin H. Kosters (Editor)
