Missing the point on minimum wage

Those who argue for a higher national minimum wage, do so in part by refuting the wrong criticism.

In a recent New York Times editorial Double the Federal Minimum Wage” the argument is that raising the minimum wage does not cost jobs. Okay, that makes sense since workers are needed at any level. But that non-argument misses the real points:

  1. Raising the minimum, gradual or not, must raise prices because it raises expenses, especially for small business.
  2. Raising the minimum, say to $15.00, doesn’t just impact those currently earning less, but those earning $15.00, $16.00, $17.00, etc. it’s called salary compression. A worker currently earning $15.00 an hour at a higher level job is not going to be happy if a lower job pays the same. This also compounds the pressure on prices.
  3. Raising pay by $1.00 does not cost a employer $1.00. It is compounded by payroll taxes like Social Security and in some cases employee benefits such as a 401k plan match. So a $1.00 per hour raise actually means $1.10 or more.
  4. Won’t doubling the minimum wage also raise the eligibility standards for safety net programs, thereby reducing benefits/income for some individuals and households?
  5. In the absence of higher skill levels and faced with higher prices created by not only higher wages, but increased demand for goods and services by minimum wage workers, what progress has been made? Haven’t we just reset low income, unskilled work at a new level?

Raise the minimum wage and index it by all means, but don’t create expectations beyond reality. The only solution for individuals is to get out of minimum wage jobs.

6 comments

  1. #4 is great for the taxpayers. The Federal Minimum Wage should be indexed to inflation, just like it is in 26 states.
    That would take the issue out of the politicians playbook.

    “The only solution for individuals is to get out of minimum wage jobs.”

    Many people do not have the ability to get a better paying job. IQ, no other jobs available where they live. I know some very smart people who are not mechanically skilled and could never work in my field of Avionics or fix their cars like I have for the last 45 years. Even people who make double the minimum wage are not really paid what they are worth, compared to what their 40 hours or more per week make the company. Most people I know who have had a much better life, have been the ones who are self employed.
    The following article has some very good information about why we should raise the Minimum Wage.
    Why America Needs a $15 Minimum Wage
    https://www.epi.org/publication/why-america-needs-a-15-minimum-wage/

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    1. Don’t you think that going to $15.00 simply raises everything so in the end there is no difference? What about the impact in states where median family income is $20,000 less than in the Northeast? $15 was picked simply because that’s the living wage indicated for NYC, not Iowa or Arkansas. If you have no ability to get out of a MW job, then $15, after all the consequences kick in, are not going to help you I fear.

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  2. Minimum wage workers are being helped out of their low wage jobs by automation and self service kiosks. A low wage is better than no wage. If you want more, learn to do more.

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    1. I agree. The true minimum wage is zero. If the cost of employment is raised – it makes automation more cost-effective. I just read something today about a proposal to somehow tax robots since they would be displacing people and reducing employment.

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      1. There are many jobs that automation will never replace. I do not use kiosks, self checkout or ATMs. I do not work for B&M and they will not give me a discount for using their automation devices. I love using my computer to order groceries from WMT.
        Drive to the store give them a call and a store employee brings your order out and puts it in your car. I save money because there are no impulse buys added to my cart. The few times I do go inside WMT, I love seeing employees pushing those blue bins around filling grocery orders. I think it will be years before those jobs are automated, by then home delivery of groceries will be more common. With all the home delivery services coming, that is where many of the new jobs are going to come from. Automation is tricky, I read where AMAZON had to shut down some of their robot systems and hire humans because of so many problems.
        Yesterday I was at Sam’s Club, purchased $135 in groceries, did not use self checkout and noticed I left the store before the people using self checkout. BOYCOTT AUTOMATION DEVICES!!!!!!!

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