9 votes

Minimum wage is not the problem, Government is!


Minimum Wage Increase Means Minimum Employment Increase
by Misterash13 12/7/13
The White House has recently shown support of the Harkin-Miller Bill also known as the Fair Minimum Wage Act, which would raise the federal minimum wage to $10.10 an hour, from its current $7.25
“The president has long supported raising the minimum wage so hard-working Americans can have a decent wage for a day’s work to support their families and make ends meet,” a White House official said.
As expected, public reaction to this has been positive. It is logical that people would be accepting of higher pay for their labor. But as with all seemingly well intentioned Government intervention, there are quite obvious unintended consequences that will come along with raising the minimum wage. Putting aside the fact that it is not the role of the government to regulate wages in a free market economy, raising the minimum wage will in fact hurt the job market rather then help.
For starters, we have record numbers of people who the job market has declared un-qualified to hold jobs paying $7.25 an hour. How can we expect these same people to be qualified for a job that starts at $10 an hour? What employer, in a struggling economy, is going to hire more workers at a higher wage when they can barely pay the people working for them now? Furthermore, the higher the minimum wage, the higher the payroll tax. This is yet more money Employers will need to shell out. This money will either come from raising prices or layoffs, neither of which help the people struggling to make ends meet.
Senator Tom Harkin, one of the Congressmen for whom the Fair Minimum Wage Act is named after said the following, “Raising the minimum wage is also about growing our economy. With an increase in the minimum wage, workers will have more money to spend. This is just basic economics: increased demand means increased economic activity,” Harkin continued. “They will spend their money in their communities, giving a boost to Main Street and generating new jobs.”
His logic in this statement is wrong in that he assusmes first that the extra income will be spent on goods and services, second that the price of those goods and service will remain stable, and third that new jobs will be generated as a result of the added spending.
These assumptions are reaching at best. The average American is $4,000 in credit card debt. Add to that Student Loans and Mortgages and Americans have over $11 Trillion in debt to pay off. Yet Harkin believes an extra hundred bucks a week in someone's pocket is going to make a difference on the entire economy. We already stated that prices of goods will go up as a result of Businesses passing the higher wages cost on to consumers. And none of this will create a single new job. It is more likely that layoffs would occurr as a result.
Look beyond your emotions and you will see what this bill is really about. Raising more revenue for the out of control government spending machine. Higher wages means higer payroll taxes paid to the government from Businesses. Three dollars more per hour for you means a dollar more per hour paid to the government in income taxes.
When you think rationally about what is really going on here, you can not help but realize that we are focused on the wrong problem. The problem is not that wages are too low, the problem is that government is destroying the value of those wages through taxation and inflation.
I'm not going to try to pertend I understand how people must feel trying to raise a family on $20,000 a year and I can empathize with people who work hard 40 hours per week and earn 100 times less then their boss. However, making wealthy businessmen less wealthy will not make you more wealthy and it certainly isn't the government's responsibility to divide that weath. Afterall, if you take away a businessman's profit, there is no reason to continue the business and now all jobs are lost; everyone suffers.
Perhaps if the government did not tax, fine, and regulate those businesses to the brink, they would have more money to spend on employees. Perhaps it would be easier for people to earn a living if the government didn't tax its citizens nearly half of their wealth (Do the math. By the end of the year nearly half, if not more, of your money is gone due to the many taxes you pay). And certainly, life would be easier if the value of the dollars you earn were not inflated away and destroyed by the endless money printing.
The problem of how much money we earn is but a small portion of the underlying structural foundation of economic problems caused by an over-reaching government. They invite themselves to dinner, clean out the fridge and pantry and offer us our own leftovers. And we thank them for it and invite them back again next week.


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meekandmild's picture

How long has minimum wage been around?

How many times has minimum wage been raised?

How many times has minimum wage not worked?

If minimum wage works, how come it keeps changing?

Well, just today I googled these questions, and I came up with

$5.25 to $5.75 to $7.25, over a period of time.

Price controls. all price controls.

Defeat the panda-industrial complex

I am dusk icon. anagram me.

Minimum wage also adds more competition for low-wage jobs.

People currently working a high-labor/heavy lifting job for $10 an hour would love to get the same $10 per hour doing something easy like flipping burgers.

Defeat the panda-industrial complex

I am dusk icon. anagram me.

Simply put,

this is a slick way for the Social Security Administration to rake in some more bucks. SS is largely funded by FICA tax at 2.9%...1.45 comes out of your paycheck and 1.45 comes out of your employer's pocket. Now, if the minimum wage is raised nearly 30%...do the math!
The feds will then get to stuff more cash into the bankrupt and corrupt SS slush-fund and abscond with the money to pay for something clandestine...like they've done since that A-hole Johnson signed it into law in 1965. Now, under the new Romney/Barrycare Act, the "wealthy" folks will be taxed harder. Those that make more money now have the privilege of paying the Unearned Income Medicare Contribution Tax...and EXTRA 3.8%.
Just like so many other things our "government" does, this minimum wage crap is a smoke screen...designed to get the nation arguing about stuff that doesn't matter, while the REAL agenda continues unseen behind the curtain. Think about it...they get us arguing about religion, commies, abortion, WMDs, federal shutdowns, twerking...whatever the topic...while they continue their sneaky ways to build up a domestic army, spy programs, street-side camera grids, food control, and the whole Big Brother full-court press...all while we're busy looking at the distraction.

Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry

here's a thought...

Lower minimum wage to $1/hr but employers have to give their employees US quarters minted before 1964. Also, government can again issue quarters using the same metallic composition as the pre-64 quarters and employees can be paid with new issue quarters.

Not entirely libertarian, I know, but its a step in that direction.


Money magic

Senator Harkin said, "With an increase in the minimum wage, workers will have more money to spend."

Where will this money come from, Senator? The employer of course. All things being equal, won't the employer have less money to spend?

Tax Increase

The income tax was passed by promising only the top 1% would pay it.

Minimum wage increases move the workforce into higher tax brackets.

Instead of a minimum wage increase, we should be asking for an income tax decrease (preferably to 0% given the way they made our wages move us into the top 1% bracket).

What do you think? http://consequeries.com/

most people who make minimum

most people who make minimum wage do not pay any federal taxes, in fact the government gives them free (stolen) money and calls it earned income credit.

They are raising it so people

They are raising it so people have money to pay the obamacare tax penalty. Actually, it'll just have the effect of making more people have an income that would require them to pay the penalty.

Minimum wage is just a symptom of the problem. In this government controlled economy you're going to have government controlled wages to try and offset the problems created by their poor management of the economy. Good luck explaining that to anyone.

In 1968 when I was in high

In 1968 when I was in high school the minimum wage was $10.68, if you adjust for inflation,and things seemed ok. There was not massive unemployment.Obviously if the minimum wage was raised too much there would be catastrophic results, but what is wrong with just keeping up with inflation?

If the economy could keep up

If the economy could keep up with rising wages, it wouldn't hurt much. But when businesses are having a hard time producing anything of value that people want to buy, whether it's due to govt interference (in many ways) or competing with overseas slave labor, businesses can't hire people for the same value they used to.

There is no economic progress in this country. There's technological progress. Every time the economy starts to do ok, the govt steps in and destroys it, resulting in a lower and lower standard of living for the average person.

Lost Jobs

Before you were in high school, I used to hire high-schoolers at student wage. It was a pain to schedule them, as there were difficult regulations about their working hours, and permission had to be obtained from their schools. Given the current economy, if the minimum wage is raised, and so many adults are out of work, why would I hire students in high school anymore? Adults with experience and mortgage to pay would help offset the increased expense, and maybe reduce the number of employees needed.

Minimum wage has eliminated entry level jobs:

Full service gas station attendants
Theatre Ushers
and millions of jobs shipped overseas where the wages are equal to the value of the work.

Minimum wage always penalizes the South, where the cost of living is lower, and the pool of labor is abundant at lower wages. The South can compete with the North because of lower wages, but when that advantage is removed, the South is impoverished as the jobs are either done in the North or shipped out of the country.

When you consider how much costs to rent, heat, and maintain a home vary from place to place, it is crazy to set a minimum wage by central planning (as it is in any case).

What do you think? http://consequeries.com/


Minimum wage is a function to limit labor.

Remove the minimum wage.

All rights reserved and no rights waived.

Increasing the minimum wage...

...does not help anyone except the politicians who can demagogue it with their dumber-than-dirt constituents. All it does economically is price low-skilled workers out of the labor market, resulting in higher un/under-employment. Raising the minimum wage hurts the poorest segment of the population, yet it is precisely those people who most support it. If this is a mystery to you, see: public education.

The most obvious reason that politicians propose raising the minimum wage is to win the votes of the dummies, but another reason (I think) is that raising the minimum wage will expand the welfare-rolls. Many of those low-skilled people unemployed by the higher minimum wage will end up on (more) welfare. And, of course, people totally dependent on the government for their very survival are the most reliable voters of all.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."

The reason to raise the minimum wage is more tax revenues.

I sound good to the worker, but it benefits government.

Except for people who lose their job, or are replaced by automation.

Free includes debt-free!

They're BOTH a problem.

OMG these people can't possibly believe that an increase in

Minimum wage helps the economy or the people working at minimum wage. This is nothing more than a ploy to get more votes for the democrat party by promising a false hope that government will help the less privileged. If the Republicans could find a pair, they should remind the historically challenged among us that the minimum wage was first enacted to prevent unskilled black men from entering the work force.

It is hard for me to

It is hard for me to understand how a person making minimum wage wont be helped if he gets a raise. I bet you might feel different if you were trying to survive on minimum wage.

Also keep in mind that many people who work for minimum wage get medicaid and food stamps. This really amounts to a government subsidy for their employers.If I do not eat at MacDonald, why should my tax dollars go to feed their employees because they are not paid enough to live.

Two issues

Issue number one: how much is a service worth to the employer? $3/hr? $5/hr? $10/hr? If the minimum wage was under $3/hr, then all three jobs would be available to the labor market. If the minimum wage was raised to $6/hr, then the $3 and $5 jobs would disappear. If it were raised to $15/hr, then all three of the jobs would disappear. Products and services will not be offered to the market because it will be uneconomical to employ anyone to do them.

Issue number two: prospective employees value their time and effort differently. Some just need something to do (teens, retirees) and $3 is a welcome bonus. Some have a payment of some kind to make, and $5 will be a god-send. Some are struggling at living independently and so they have to make at least $10/hr to cover rent, utilities, food, and taxes. These might be ones who gain work experience, take on more responsibility, learn new skills, and look for better jobs to better themselves.

When the minimum wage is raised to $15 per hour, the people hurt the most are the workers. There are no jobs for teens or retirees, unless it's unpaid volunteer work. There is no way for people to earn a few extra bucks to cover their extra bills. There is no way for people at the low end of the income scale to get started at bettering themselves.

We all have minimum requrements for income based on our particular circumstances. Mine is rather high, as I'm supporting a college student, a non-working wife, and a parent in an assisted care home. I just read about a guy who owns his tiny cabin free and clear, grows his own food, keeps his electronics to a minimum, barely uses electricity, and works at a job that pays $12,000 per year...and he considers himself to be happily free. I envy him in some ways.

Since our life circumstances are all different, shouldn't we be free to work at whatever wage someone is willing to pay us? Why force us to be idle when we don't wish to be?

in Australia the minimum wage

in Australia the minimum wage is 16 dollars an hour in US dollars and their unemployment rate is 5.3 %. That is strong evidence that theories do not always match reality.


Careful with statistics

Different countries compile similar statistics differently.

For example, Canada has a lower health care cost as a percentage of GDP versus the U.S. However, capital expenses (building hospitals and clinics) is not included in their calculation, nor is the amount of money spent by Canadians going to U.S. hospitals. So the stats are not equal.

Example, #2: The U.S. is way behind in Infant Mortality statistics compared to much of the rest of the world...but not all countries count live births the same way. So deaths in some countries are not counted because the child was not considered to have been live long enough to consider it a live birth.

Example #3: The murder rate in the U.S. is higher than the rest of the western world by a long shot...but we count murders at the time of accusation whereas some countries only count them after conviction. In the U.S., if three people are charged with a murder, it is considered three murders, whereas in England if three people are charged with a murder, it is not a murder until someone is convicted, and if all three are convicted then it is counted as one murder.

When statistics fly in the face of the law of supply and demand, then there is something fishy about the statistics that deserve a much closer look. Raising the price of an hour of unskilled labor from $7.75/hour to $15.00 per hour is akin to raising the selling price of a Ford Escort from $20,000 to $40,000. A whole lot of Escorts will go unsold at that price.

The same is true of workers and cans of peas.


Would I rather make $7 or $15 per hour? That's an easy decision for anyone to make, until that $15 per hour job is out sourced to Asia or automated.

check this

Having watched Mr. Hartmann

on RT over a few years now...I automatically give him ZERO credit or attention on any topic. He should not be a source for your arguments, if you are truly a liberty-lover and an intelligent economist.

Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry

I know nothing about Hartman.

I know nothing about Hartman. Are you claiming that the minimum wage and unemployment numbers he cited are not correct?

Progressives are notoriously bad at economics

It was Progressives that thought artificially low mortgage rates were a good thing. It was Progressives who thought zero down payments on mortgages were a good thing. It is Progressives who think that the deficit doesn't matter. It is Progessives who think forced wealth redistribution will lead to prosperity for all. It is Progressives who think a little inflation only helps the economy.

I could go on.

The Law of Supply and Demand is like the Law of Gravity. When statistics contradict the Law, then it is the statistics that are suspect.

Agreed that the Federal Reserve and Federal Govt....

...are the problem. I personally believe the best route for the worker would be to abolish minimum wage laws. HOWEVER...as long as we have a minimum wage it needs to be raised IMHO. The wealth in this country has moved up the pyramid to the wealthiest 1%...by THEIR design. Time to share some of the profit a little...geesh. One can not survive on minimum wage...even working 60hrs a week...in many areas of the country.

“Those who make peaceful revolution impossible will make violent revolution inevitable.”
- President John F. Kennedy

fireant's picture

Where do you find minimum wage workers?

Shopping stores, fast food, grocery stores. That's the same places minimum wagers shop for essentials, and it's where all prices will have to increase in order to offset the added cost of paying a higher minimum wage. Right back where you started in short order. That's called a vicious cycle.

Undo what Wilson did

McDonald's Feeds the Homeless

I have frequently seen the homeless getting their meals from fast-food places. Add to that the budget-conscious shopper, and you are clearly correct: raising costs hurts the poorest consumers most.

If we got rid of the minimum wage and ended regulatory overhead, the homeless could be paid a few bucks to sweep the parking lot (and beyond), and be returned to the ranks of the gainfully employed.

Why wouldn't a store manager hire them now? Because the wage they are worth paying is less than the legal limit, so either they waste the owner's money, cut someone else, go out of business, or break the law to do it.

What do you think? http://consequeries.com/

You don't make a bad law

You don't make a bad law better by increasing worker dependence and placing more undue burdens on businesses and consumers.