MINIMUM WAGE = FEWER JOBS!
Written by Jim “Gymbeaux” Brown, March 5,
2021
Anything appearing in BLUE is a link to a web site
DISCLAIMER: I am not an economist but I have on occasion
demonstrated limited “common sense.”
President Joe Biden said he was
going to raise the minimum wage to $15.00 an hour and so far, he is attempting
to deliver on that promise.
If you read ONLY the
headline of that story, you might be like most Americans and declare, “It’s
about time.” But few if any headlines tell
the entire story yet, Americans have become so accustomed to headlines and soundbites,
few if any, actually read the entire story.
$15.00 an hour in cities like New
York, Los Angles, San Francisco, Chicago, etc. may sound like a great idea
because the cost of living in those cities are so high. But what about cities like Bogalusa, Morgan
City, Pearl River, and even New Orleans where the cost of living is NOT at
the same level as cities like New York?
What about the minimum wage in those cities? Is the Federal Government going to MANDATE,
REQUIRE, PENALIZE, employers in Pearl River, Louisiana by establishing
how much they EACH MUST pay their employees as a starting salary
regardless of skill levels and actual job performance? Is that really what Americans want to see
happen? Is that what YOU really want
done unto you?
When did it become a common
acceptance that a minimum wage was designed to support a family because that is
the argument I constantly hear when people attempt to justify the increase? I remember growing up as a kid that minimum
wage meant that people like me were hired to perform minimum skilled jobs at a
minimum wage because I had, are you ready?
MINIMUM SKILLS! I also
understood that as I became more proficient and was assigned more and more tasks
to learn and perform well, my employer would occasionally raise my wages. For the record, my first job in 1957 paid 60
CENTS an hour. I was a stock boy in a
local drug store.
What would have happened to my
$1.20 per hour wage that I began earning as I proved myself IF the government required
my employer to pay all new employees $1.20 per hour, the same that I had
started to earn through my job performance?
Would my employer raise my hourly wage?
Or would my employer just ask me to remain at the $1.20 per hour or I
could leave the work place and look for work elsewhere? Could or would my employer afford to pay all
the new people $1.20 per hour and increase my pay to say $1.35 an hour to
compensate me for something that I had already earned prior to the new minimum
wage imposed on my employer?
If an employer is mandated to
raise their starting minimum wage to $15.00 an hour, employers will have no
choice but to either RAISE the price they charge to consumers for their
products and/or services or eliminate the number of employees they hire JUST
TO BREAK EVEN WITH WHAT THEY NOW HAVE! If an employee reduces the number of
employees, that probably will adversely affect the services and/or products
they sell which will adversely affect their profit margins. THE EMPLOYERS OF AMERICA WILL LOSE EITHER
WAY! More importantly to people like
Joe Biden who DEPEND upon tax dollar revenues coming to the Federal
Government, fewer employees will equate to less tax revenues. If businesses
were to close because of excess costs of doing business, that too means less
tax dollars coming into the Federal Government. AGAIN, EVERYONE LOSES. And what about the teenagers and also the
senior citizens who have come to depend on using minimum wage jobs to
supplement their incomes? They too are
hurt.
In short, wages should be driven
by the market place, NOT THE FEDERAL GOVERNMENT. If an employer doesn’t want to pay people
what they are worth based upon the work the employer demands they perform, people
should choose NOT to work there and go elsewhere for work.
REAL LIFE SITUATION: The year was 1979 and the oil and gas
industry in Southern Louisiana and Texas was booming. I served in the U. S. Coast Guard at the time
this situation occurred. There was a
huge demand for ships designed to service the offshore oil producing
platforms. They could not build the
ships as fast as they could be sold.
What happened? The MARKET took
over. Shipbuilders would put
probable ship buyers on waiting lists for their ships to be built. What happened next? Ship buyers who were low on the list realized
that they could “buy” their way to the top by offering money to buyers who were
higher up on the list to switch places, much like what happens every April with
the National Football League Draft. If
the DEMAND (MARKET) for the ship to be built exceeded the
additional cost of moving up the list, the ship buyer determined that moving up
the list was a prudent business decision, paid the money and moved up the list
and received his or her new ship faster than had been expected.
During this same period WELDERS
became a premium skill trait. Welders
were desperately needed in shipyards to build ships and also in yards where the
offshore rigs were being built. Housing
at that time in the Morgan City, Louisiana area, where I was assigned by the
Coast Guard, was non-existent. I
eventually rented an apartment in the New Orleans area and drove U. S. Highway
90 back and forth from New Orleans to Morgan City EVERY DAY because I could not
afford to buy a home nor could I find a home that I could afford to rent on my
Coast Guard salary anywhere near Morgan City.
Other factors entered my decision to locate my family in New Orleans and
I chose to drive the almost 100 miles one way, every work day.
On my daily commute I would see
full size road side billboards advertising for Shipyards needing welders and
the billboards would include the hourly wage being offered to anyone signing up
to work. The very next billboard I would
see would have a similar wage crossed out with a slightly higher wage roughly
painted over. It was that way the entire
distance of my drive to Morgan City. It was
a case of SUPPLY AND DEMAND where the MARKET determined the wage
structures.
This is a PERFECT EXAMPLE of “the market” dictating what
wages would be paid to people to do specific work. The wages were determined by what the market
would bear NOT by some politician sitting in Washington DC.
Another PERFECT EXAMPLE of “the market” at work, occurs
every day in every locale across the nation in the real estate market
place. People have bought and sold homes
for hundreds of years. How much is a
home worth? I can tell you by my own
experience that in 1979, homes in the Morgan City, Louisiana were off the chart
as compared to other areas of the country.
This was “the market” affect on the value of homes. Were they actually worth as much as people
paid for them? They were to the people
who bought them. They were considerably
higher than an equivalent home located in the New Orleans area just 100 miles
away. The point is obvious and well know
to most people but not apparently to Washington politicians, THE MARKET BEST DETERMINES VALUE, not artificial
price controls (minimum wages) set by politicians in Washington, DC.
I don’t fully understand how “rent
controls” are used in the New York area but my limited understanding is that THE
government determines what is to be a "fair rent” for an apartment as
compared to what the market could or would bear. As real estate values in the New York City
area began to significantly rise because of the increased commercial activity,
rental values would also necessarily rise but NOT if the government
imposed its control through “rent controls.”
Why would anyone buy a unit to rent if the government controlled what
they could charge for the unit? A
prudent investor wouldn’t. Property
owners who already own the units are then stuck with the units collecting lower
than market value rents and cannot sell because the incoming rents would not justify
a property investor paying a high price for a unit that could not, by regulation,
pay for itself through higher rents collected.
Dah!!!!!
IT'S
THE MARKET STUDPID! It IS
the “market” that should determine values and wages, not the
government!!!! How difficult is this to
understand. If someone never studies how
businesses operate, they would have no understanding of how little profit is
actually made by a great many businesses.
When one of the elements involved in the cost of doing business (minimum
wages) increases, owners are left with FOUR
choices. ONE,
they literally eat the losses they will incur thus lowering the profits they
earn. TWO,
they hire fewer employees or they reduce the number of hours the employees
work. THREE,
they pass the increased costs of doing business on to the paying
customers. Or FOUR, a combination of all three choices. What would the most PRUDENT business decision be when the
government increases your cost of doing business? In my world, it would be to reduce the number
of employees so you can afford to pay the increased wages to the fewer employees
you have remaining on the workforce. It may
also mean using automation instead of humans to do the work which we have seen
occur in fast food restaurants. Ultimately that would most likely result in
less customer service to potential paying customers; not a good outcome. If I keep the total number of employees and
pay them the government mandated wages, I would be forced to increase the price
of my product or service to the paying customers, again not a good solution for
future business profits. As a business
owner I lose no matter what choice I make created by GOVERNMENT INTERVENTION IN MY BUSINESS OPERATION!!!!!
The ONLY people, certainly
not you, who think that it is a good idea for the GOVERNMENT to raise
the minimum wage or get involved in establishing wages at all, are people who
have come to rely upon the government for their income or benefits. GOVERNMENT
INTERVENTION leads to more and more SOCIALIST policies
dictated by “the government.” The more
such policies are put into effect, the less freedom everyone enjoys in their
daily lives. Government Intervention, as
F. A. Hayek so aptly describes in his
book The
Road to Serfdom, (written in 1943) leads to Socialism and
Socialism eventually leads to Communism, there is no other choice once a
country starts down that road.
Interesting question. If you believe that the government should
REQUIRE an employer to pay an employee a minimum wage, what would keep that
same government from establishing a MAXIMUM limit on what a person could
earn. What would that do to CEOs,
Hollywood Elites, Professional Athletes, sales people earning commissions on
their sales? For example, would a
professional kicker in the National Football League be permitted to earn in
excess of 7 Million Dollars for a job that takes less than 5 to 10 minutes of
playing time in each game played? Or,
how much money would be considered to be too much money for a very successful
real estate agent to make selling real estate?
Where is the government mandate for that grossly OVERPAID
individual?
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