Rants, Raves, & Random Thoughts

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Thursday, January 20, 2005

Minimum Wage Woes

I heard a proposal during the presidential debates that sounded great at the time but once I had some time to mull it over, actually scares the hell out of me.

“We should raise the minimum wage to $7.00 per hour.”

Wow that would help a lot of struggling families. It would put more money in the pockets of the people, who in turn will put more money in the economy. Sounds great.

Where will the companies come up with the extra $1.85 per hour, per employee that is at minimum wage, they will now be paying in overhead? Will they just take it out of their profit margin? The safe money bets that they will raise their prices to compensate.

What’s more, if they are a company that feeds products up to a bigger company, then the next company up the chain has to deal with the extra $1.85 per employee and the extra cost to buy their materials.

Before long, everyone is raising their prices until they reach equilibrium. The cost of living has just gone up nationally to reflect these changes. The seven dollars that is earned now has the same buying power as the $5.00 did before the raise. So the illusion of more money will only last for a year or so, until the economy re-stabilizes.

Cool, no harm no foul; they had a brief moment that they saw a bigger number on their paychecks and it made them feel good. When the cost of living goes up they are no worse off than they were before.

What happens to the families that have been working hard and have gotten raises that have them currently sitting at $7.00 per hour or just over? Or anyone else that doesn’t make minimum wage? Will our employers just automatically raise everyone else’s wages as well? Of course not, so when the economy adjusts and the cost of living increases, it will feel like everyone else that works in the nation just got a $2.00 per hour pay cut.

Now, not only do you have the people making minimum wage struggling to make ends meet, you have families that were making above minimum wage struggling when they weren’t before.

I realize that the minimum wage hasn’t been raised since 1997, and families that are trying to sustain themselves at this wage could use the extra money, but aren’t there government subsidies in place to do that very thing?

I don’t know, maybe I am just an asshole, but I say leave it were it is. I don’t think our economy is strong enough right now to absorb such a change.

1 Comments:

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