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Tuesday, January 14, 2014

Why Must We Raise The Minimum Wage?

OK, so I can't walk away from annoying one Liberal a week.  I am aiming higher this week!

Help workers by raising minimum wage

info@islandpacket.comJanuary 14, 2014 

Read more here:

The current economic recovery coughs and sputters, largely because of insufficient consumer spending. Consumer spending lags because incomes in the mid- and lower range have stagnated or declined. Those incomes have stagnated or declined for two reasons:
1. The share of the national income taken by the richest 1 percent has increased from 8 percent of the whole in the 1970s to 24 percent in 2007. What's left for everybody else has shrunk correspondingly.
When CEO salaries soar (now about 350 times that of an average employee), less money is in the pool for everybody else. Say $20 million was shaved from the $62 million annual salary of CBS chief executive, Leslie Moonves. Then 2,000 lower-paid CBS workers could each enjoy a $10,000 raise.
But what could force such a change?
2. Labor unions and the minimum wage law long were the principal forces shoring up wages. Many factors, including illegal union-busting, offshoring of production, and so-called right-to-work laws, have gutted private sector unions. If Republican politicians have their way, public sector unions will wither too. Then what could prop up wages?
All that would be left is the minimum wage. Alas, its purchasing power peaked back in 1968. Today's minimum wage, adjusted for inflation, has lost fully one-third of its 1968 value.
To help the poor and invigorate the economy, we should gradually raise the minimum wage to a level where no full-time worker needs public assistance.
Raymond Dominick


This is my reply.  Brevity is not my strong suit!

Raising the minimum wage will not help the worker, but ultimately cause more harm not only to the worker, but the economy.  Raise the minimum wage, then the cost of goods and service must increase to cover the expense. 

The majority of jobs created are by small businesses who already operate on small profit margin.  They cannot afford the additional expense of the higher wage and must either pass the cost onto the consumer or cut the number of employees.

I applaud Raymond's intention of helping the impoverished worker.  However, the overall affect as proven in past history, would be the loss of jobs to the disadvantaged adults who need the jobs and replacing them with suburban teens who don't need them.

Who benefits? Government in increased tax revenue.  The higher the wage, the higher the tax liability, the lower the actual take home pay. Higher minimum wage creates higher prices, taxes, cost of living and loss of jobs, all which eats away at any benefit of a higher pay.

Unions, which once were beneficial to employees by securing safer work place, better hours, wages and pensions acted as a buffer between workers and owners/management.  Today, they mostly have abused their power.  This is proven by lower membership in unions as more members are dissatisfied with union leadership and rules.  More and more workers are voluntarily opting to work in union free environments.  More business are choosing to move or open shops in Right To Work States offering better wages and benefit packages then  those in union shops.  Compulsory union dues take large bites out of paychecks and members have no say in union actions in politics and political donations.  They are told we will take your money and you have no say about what we do with it.

As for the 1% argument, why is it the Communist policy of spread the wealth so attractive?  It doesn't work. A CEO just doesn't appear out of thin air without formal and industrial training.  They get the higher salary because they earned it.  If you feel an executive doesn't  deserve his or her salary, you have several options open to you.  Write the company a letter stating your opinion.  Boycott their goods and services.  If you own their stock attend their shareholder meeting and exercise your vote.

Government can do a few simple things to increase the take home pay of workers without raising the minimum wage. They can get rid of burdensome over regulation and taxation which costs businesses of all sizes billions of dollars a year.  A farmer must fill out paperwork every time they move fertilizer from one spot on the farm to another.  The paperwork on average takes up to 50  hours. That is just one of the many regulations that, a farmer must adhere to.

Tax compliance is another huge costs to businesses also costing a tremendous cut into profits. I won't mention job killing Obamacare.  It is the effect of odious regulations and high taxes which has driven businesses and jobs out of the USA.  There are no incentives to entice businesses  to return jobs and profit back to our soil.  If businesses are relieved of these burdens then more profit will be retained leading to businesses expanding, creating jobs and increasing employee pay.

Austrian Economics works.



  2. I agree. Most people do not think about who gets the increase? The government would love to see it because it would add more money to the Social Security coffers as well as unemployment coffers. Employers and minimum wage workers would be the ones loosing.
    For a 1.00 increase the business owner will have to raise prices about 1.10 to 1.15 to cover additional costs (a 1.00 raise does not just cost him 1.00). The employee will get somewhere between .75 and.85 cents of the 1.00 after withholding taxes. So now they have .75 to .85 to pay a an increase cost of 1.15. The government gets the missing money.