Minimum wage is not the problem, Government is!Submitted by misterash13 on Sat, 12/07/2013 - 09:16
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.