WHAT DO YOU THINK? Are Minimum Wage Increases Really Affordable?

This one comes to us from today’s headlines of today’s USDoL Newsletter…


The full text of these findings are quite interesting: Opinion Poll: Small Businesses Support Increasing Minimum

And how would this bottom-up stimulus effect Govies?

  • How many of us feel like they we have “more purchasing power” these days? Would this type of increase help or hinder federal salary adjustments?
  • Would it contribute to retaining good govies and help us attract new ones who can perpetuate and magnify the good works and services we provide today?
  • Would this have a direct effect on our bottom line as well? and…
  • Would it put more money in our pockets too, so we can help small businesses with our purchasing power?

Just some thoughts…

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Profile Photo Peter Sperry

Clearly the amount of the minimum wage has no impact on business decisions, So it should be raised to $200.00 per hour, yeilding an anual income of $400,000.00 per year for all workers. This would instantaly transform all of the 99% into the 1% with no negative impact on small, medium or large businesses.

We know this must be true because a “business” advocacy group (whose board and staff just happen to be liberal activists) has produced a “study” (with no discussion of methodology) showing that “small business owners” (selection method??? sample size??? screening criteria????) overwhelmingly say so.

Back on planet earth, every competent economist recognizes there is a significant tradeoff between increases in mandatory minimum wages and business competitiveness. Even economists who support minimum wage increases acknowledge this basic economic fact of life, while arguing the benefit to workers is worth the cost to businesses. Most will also acknowledge that increasing minimum wage results also increases unemployment. Some economists believe the linkage is weak others strong but almost all admit it is there.

And there is the small problem that just about every study ever conducted on minimum wage increases has shown the subsequent inflation from small businesses raising proces to pay the new wage rate wipes out any increase in purchasing power within 18-36 months.

Ultimately wages set in the market place based on supply and demand at varying skill levels consistently yield the highest realistic purchasing power for workers at any given skill level. Artificial distortions of these wage rates merely send inflationary waves through the economy with no meaningful long term benefit for anyone.

But they make us feel good while the sugar rush lasts!

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Profile Photo Henry Brown

The other side to @Mr. Sperry’s viewpoint might be that this argument seems to go on everytime that the federal government suggests raising the minimum wage, and in just about every case it has proven that a 5 to 10 percent increase in the minimum wage has had very little impact on the income of the 1%, and usually increases the income of the small and medium size business owner,(by making available more spendable income by a certain percentage of consumers)

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