If you think raising the minimum wage - or even the existence of a minimum wage - is a good idea, think again.
Among other things, maybe you should realize this first: You have completely missed a basic property of wages - and the USA has an illegal immigrant problem because of minimum wage laws.
Consider the cost to YOU, an employer, if you hire someone under those laws:
• you must identify an employee as yours
• you must keep track of their hours to make sure of their status w/r/t medical care
• you must insure them both medically and against incompetence/mistakes on the job
• you must provide a workplace free of hazards per OSHA
• you must show that they are legally employed
• you must withold taxes properly
• you are directly liable for their performance.
Or you can hire somebody "under the table". The work gets done.
Yeah, I thought so.
But let's talk about money, since it's the cry of people who think their first job should be their only job. Whenever a hike is mentioned, pundits actually ask a very good question:
Why not make it $20 an hour? $100 per hour?Have you answered that? Because that's only a matter of degree. It's logical to ask that.
The fact of the matter is that there is an effect on cost that is invisible unless you know how the market for labor works.
When you hike the minimum wage, you devalue the dollar immediately.
This is because there is no change in the amount of work obtained for more dollars!
Let me spell this out for you.
The DOLLAR is a marker, which people use for trade. Left to themselves, people decide how many dollars are appropriate to trade for a product or service. There is always a ratio of the number of dollars needed to obtain a product or service, and this ratio is established by the customers. It is known as "what the market will bear".
Now, when speaking about a service (labor), there is always a unit involved:
One Hour Of Work.
Now, there is a fundamental quality to this. One Hour Of Work cannot be changed by anyone - not government, not an individual... and satisfactory work always has the same quality to it: the Hour Of Work produced the desired result.
Now, here comes a government agent, who or which has decided that the long-term effects of legislation are insignificant next to the good will and votes available by appealing to that mysterious demographic, "the poor", and people sympathetic to their plight. Somehow, it is impossible for an American to "earn a living wage" without government action.
(You MUST IGNORE the success of immigrants for this case)
The agent declares, by law, that One Hour Of Work must cost at least X dollars. Now, the ratio of the number of dollars needed to obtain a product or service is established by the government.
The law has just set a number of dollars as being worth One Hour Of Work.
When that number is increased - by the SAME entity which establishes "full faith and credit" for those dollars - the actual value of each dollar is immediately decreased.
Glue this to your forehead if you will forget it - legislation cannot change an hour of work. It can only change the number of dollars required to pay for it.
Maybe I should say that again for you, since a lot of people don't seem to get it: legislation cannot change an hour of work. It can only change the number of dollars required to pay for it.
And have you noticed this? "Government", or the employer, is not paying the unskilled worker more - YOU, the Customer, ARE. It is always the customer who pays the costs of any business. You are not changing this, either.
Want a great example? Look at any Federal facility, like Savannah River Site. Workers there make quite a bit more than minimum wage, which you might grant because of the hazards of handling radioactive waste -- but will you get more work if you raise their pay? NO.
Work is determined by the process, not by wage legislation. If they - I - were granted a raise, you, the taxpayer, would pay more for the exact same tasks.
How do you like that idea?
Here's what happens in the workplace, courtesy of Andy Puzder, CEO of Carl's, Jr:
“For example, Apple did $39.5 billion in business last year, and only has 97,000 employees. So they made about 407,000 dollars per employee, which gives you a lot of latitude to increase wages, if you want to do so.
In the retail segment, if you take all 22 retailers on the Fortune 500 and add them together, they did about $34 billion in business last year, and … made about 6,300 dollars per employee.
Now if you give a minimum wage employee an increase to 12 dollars an hour, rather than making 6,300 dollars an hour on employees, you lose about $1,100. If you give them a raise to 15 dollars, you lose about 6,000 dollars per employee.”
It doesn't matter if we talk about Andy Puzder or you: you must make money to keep your business open, and it costs about 135% of a person's declared wages to employ them.
Let me present a practical example.
Imagine for a moment that I have gifted you $50000 to open a store, and that once ALL of that money is GONE, you now have a store with two employees. Business licenses, insurance, power, water and data(phone), are paid for, a year in advance. The store sells Gadget™ brand Doodads© of fifty kinds, and nothing else. There are one thousand Doodads© in stock.
You will pay the wages to two employees, and save up to pay those recurring bills, from the money you get from your customers as they buy Doodads©. You also buy new Doodads© to replenish stock. Whatever you have left over, if anything, is yours to keep or invest as you choose, because a) the gift was to YOU, and b) it is ALL GONE. It is now up to you to stay in business.
1) Where does a pay raise come from?
2) What if taxes or those recurring bills go up?
3) What happens if the Affordable Care Act applies to your workers?
4) Is there any such thing as "free" money?
Go ahead. Make things up. You can do that here, but trust me, no bank is going to let you pretend anything.
Now, think about those bullet points up there and those two employees.
Administrative costs are real. It turns out that you have to EARN at LEAST 135% of an employee's wages before having that employee benefits your business. For example, you have to take in about $13.50 an hour to pay them $10 for that hour. The employee has to help move those Doodads© at a profit.
This is one reason there is markup on merchandise (the other is storage, handling and inventory tax expenses).
If you sell a Doodad© for {Cost=$10} + $3.50, you must sell one every hour just to pay the employee.
If this does not happen, you lose money, and cannot continue to employ that person no matter what - and you must sell more Doodads© to pay the other expenses you have before the business earns one penny.
Back to that universally-mandated minimum wage idea: Remember
asking when you would ever use algebra in the real world? Well, here
you go - what happens when you add the same amount everywhere? Yes, when
you hike everyone's pay, nobody is better off. They just feel that way
momentarily because they see a bigger number on their paycheck.
Nationally, minimum wage increases are one of the Big Three reasons for the inflation you see today (the other two are Affordable Care Act restrictions on full-time workers and Federal pandemic spending without sending government employees home).
Go
look on the shelf at the supermarket, at the gas pump, in a jeweler's
cabinet and see what you're supporting by way of wage - and therefore price! - hikes. It's not
"them" - it was you, supporting minimum wage. One of the reasons illegal immigrants are here and textile jobs are overseas.
