Today’s minimum wage discussion on Vicevich’s show
Since the minimum wage discussion is coming up on the big radio show this morning during the first half hour, I thought it would be appropriate to refer back to a few previous posts.
The American people are being sold a bill of goods – lied to – concerning the effects of a minimum wage. Federal and state minimum wage mandates do nothing to help provide a “living wage” nor does it do anything to improve the overall employment picture. Walter E. Williams’ column today discusses how this government interference ensures about one in four minority youths are unemployed.
When the government mandates you pay employees a wage that is more than what a free market would determine, businesses have decisions to make. They can…
- Increase prices
- Cut expenses (reduced quality/service, cut employee hours, reduce benefits, layoffs…)
- Accept a lower profit margin, or
- Some combination of 1, 2 and 3.
For a small business with thin profit margins, these are very difficult decisions to make. If you are a small business employer who happens to be part of the group of 25 percent who are underwater in their home mortgage, you’re not going to be able to easily take a pay cut.
Can you increase prices? Sure … but what will the market pay? Unlike the government mandating what you must pay employees, the government does not mandate private individuals buy a product or service from you (yet).
Will you elect to work more hours and not hire those extra seasonal employees this summer? Well, that’s exactly what’s happening, and there is a staggering discriminatory effect in play.
More from the RVO archives on the minimum wage all the way back to the summer of 2008.
You can click here to list all of the posts including the ‘minimum wage’ phrase, or click on the links below to take you directly to the posts.
- Confirmed? Raising minimum wage increases unemployment (Aug. 2008)
- Raising the minimum wage making things worse (Dec. 2008)
- Is the minimum wage increase helping? (Sept. 2009)
- The economics of the minimum wage (March 2010)
- Uncle Sam decides to help Samoa (June 2010)
36 Comments
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It is yet another back ended tax on business, while lefties pat themselves on the back about how much they have helped the poor…
Do we have to pay a minimum wage to illegals?? Nope.? Another way that illegals will be supported, once again to the benefit to Democrats.?? Fewer citizens hired, more illegals hired.? ’nuff said.
Whaaa??? Dimsdale, no offense but you have gone so off the wall with your daily conspiracy theories that you’ve ceased making any sense at all!
So the concept that increasingly more expensive labor by citizens won’t be supplanted by a cheaper alternative by illegals?? What do you think they are doing now?? Conversely, it will drive the market for under the table work, which cuts out the government middleman, lowering tax revenues.
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That isn’t a conspiracy; it is just basic economics.? And basic (or is it typical?) stupidity by liberals (and some RINOs, of course).
OT: every time you say “Whaaa????”, I picture Lucille Ball in “I love Lucy”!?? 😉
This is old, but it is a festival of the damage the minimum wage and its increases do to the U.S.:
http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
It’s a profound disservice to job seekers.? It shrinks tax bases by discouraging new hiring while forcing some businesses to reduce payroll.
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The fact that we’re being lied to is nothing new.? The lie is calculated to fool people into supporting policy that will hurt them.
Yes, the key to all of this is the disincentive to hire anyone – and the fact that EVERYONE in government knows this. They may not let on that they do, but they do. My interest is in why the proponents of the minimum wage are directly damaging the only true growth area for real jobs that contribute to the economy- the small business and service sector. We pay taxes, we vote, we hire when we can, and we are constantly being screwed. Why??
I know several people who have their own businesses. All tell me that the various governmental monetary demands on their businesses preclude their growing and expanding. One man who is an inside painter, ticked off all of the fees, permits, sales tax, insurance, filing paperwork, vehicle, etc. that he has to pay for just to work for himself. It’s unbelievable!
My friend would like to hire a worker to help him paint. Hiring one person would cost far too much. The added unemployment insurance payments, increased insurance, etc. would mean raising prices. His response to raising the minimum wage is that he already has the government in his pocket (enough to more than cover hiring an employee), raising the wage only means that he is further away from being able to hire someone. So, he works alone. (Having an employee has other headaches, too.)
And then does the paperwork on the weekends and evenings.
The point is that if the governmental fees and taxes weren’t so onerous, he could have hired someone. But, he is already paying an unproductive, silent “partner” that sucks money from him. (Don’t even get him on the subject of ?bamaCare!)
The story is much the same with my other business owning…
To second your opinion, JBS, the higher the wage -? the higher the unemployment tax on the employer and the more FICA (Social Security tax) the employer pays.
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It’s not just about the actual wage which politicians find so convenient as a sound bite.
A higher minimum wage certainly increases under the table work.
If the cost of doing business goes up, the price of what is being delivered goes up. Isn’t this the way capitalism works??
Ahh…..No!
Here’s my take on that. I’m no expert but some things?seem so simple that even I get it.?
Capitalism works by finding the price that people will pay for your “product” while still making that product for less than you sell it for. Force an increase in production cost and business either produces with fewer employees or?tries to find a way, or place,?to produce that product?for what it cost before the increase in production cost.
?Simply raising the price usually has a negative effect, unless of course it’s?heating oil or gasoline or electricity or food. Then you?usually get a change in leadership….Hopefully!???
How the heck do you define the government MANDATING something capitalism?
A government mandate ensures a market and is a disincentive to cost control.? The best regulation is a free market.
Or the arbitrarily increasing confiscation of profits through taxes to cover vote buying legislation.? The “cost of doing business” becomes “the cost of supporting government” which is the path to socialism.
The painter from my example feels he can not raise his prices at this time. Not at least while the economy is the way it is.
Her’s where private sector and public sector differs. Public sector, electric company for example, experiences greater costs for delivering electricity, it passes those costs along to you and me. In my example, good for many other businesses, the business owner competes to get jobs. The bid has to be competitive, unlike the monopoly electric company.
There is a finite limit to which my painter friend’s prices can rise. To much and he doesn’t get the bids on jobs. If there is a rise in the cost of supplies used in painting, my friend factors that into the bid. However, the bid still has to be competitive.
Or healthcare.
Again … the government’s direct involvement in health care – and just about EVERY aspect of it – completely precludes it from representing ANYTHING EVEN CLOSE to capitalism.
We’re not talking about a few state regulations to protect consumers, we’re talking about FULL BLOWN REGULATIONS touching every single aspect of the health care industry (and mandating the minimum wage).
Your premise is completely false.?
Regulations by the incompetent makes it even more egregious.
Governments make laws, that is why it’s there (I think). It seems that when the laws are not to one’s liking, they are (pejoratively) called mandates. I believe the Constitution provides a recourse.
In this case, we are talking about an unfunded mandate, i.e. the government is telling businesses to cut into their own profits to pay someone what they may or may not wish to pay them, or more than the market will bear, without recompense.?? They are telling them how to run their business with total disregard to supply and demand of employees, to no apparent good end, as the price of everything goes up, and employment goes down.? A lose-lose proposition, unless you are the government, of course.
If you don’t understand the difference between a reasonable law in place to protect the life, liberty and pursuit of happiness for Americans as compared to a mandate that – falsely – claims will make things more “fair” for some group in need, there is no need to discuss further. True rights exist simultaneously between people, meaning the exercising of a right can not diminish the rights of another. Liberals seem not wired to understand that basic fact, and always want to pick winners and losers.
The federal government is not there to “make laws,” same with the state and local governments. That claim is bull. The governments role here in the United States is to preserve, protect and defend the USA, and to protect one’s life, liberty and the pursuit of happiness. Of course, liberals/statists/socialists always think the government can fix things and make things better and more equal. How they doing so far? How’s the New Deal, War on Poverty and the Great Society going? No improvements on any front, simply status quo or worse.
Steve, you bring up a great point that should be it’s own topic of discussion. I have this argument all the time with people on both sides of the ideology who complain about a “do nothing congress”. I see that as a GOOD thing. I tell people all the time that gridlock is good, unless of course it has to do with actual gov’t business?like budgets. Gridlock demands debate and the result is usually forwarding bi-partisan legislation, or no legislation. I’m tired of hearing that congress is in session to make/create laws. We have enough doggone laws.
?Just sayin’?
I was told in Civics class that we have 3 branches of government: one to make laws, one to execute laws and one to judge if a law violates the Constitution. Seems like you have a different take. It was not necessary to add a put-down to give more weight to your view.?
Seems you didn’t get that class.
Where your statement?about the 3 branches of government?is correct, I would hope/prefer we don’t?have a bunch of or narcissistic egomaniacs going to Washington DC ?just to “make laws”.??
Should we all stand up for ourselves and cherry-pick the laws we like? I was told in the same Civics class that the US is a nation of laws (to be followed, until changed?).
Why do you keep advocating quantity?
More laws equals more better society? We are a nation of laws! Until the laws become so numerous, cumbersome and difficult for the average citizen to? know or understand that we all need a politician in our pocket or a lawyer on call to use the rest room without breaking one.
You might pass that on to the ?bama administration.? Between unconstitutional executive orders, violations of the requirement for the Senate to advise and consent,? selective enforcement of the Bill of Rights, special favors (waivers) in violation of the equal protection clause, lovingly coated with incompetence (just to name the things off the top of my head), I don’t think it is this group that has the problem with cherry picking.
All I can add is that the Fair Minimum Wage Act of 2007 was signed into law on May 25, 2007.
Absolutely correct. There are laws that start with good intentions, but when they are tested and do not work as expected, WE let them go on and on. WE have all stood by and let things stay status quo. If I had my way, I would love a candidate that would say, NO more new legislation. We will go through the govt. dept by dept and throw out all who did not meet the criteria set up in the original legislation. It is truly time for us to demand government to work for us, not to make an elitist Congressional caste.
I do not buy into the whole “good intentions” smoke screen but otherwise I agree.?
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Accepting any premise that elected officials will willingly act on behalf of anyone but themselves or special influences is the basis for inattention that has enabled things to get to the point they are today.? If I’m not mistaken, minimum wage is used as a basis for determining union pay scale and if that is correct this is just a way to surreptitiously get around a loudly promoted wage freeze component of a so-called concessions deal and a possible hint as to why we find ourselves in a deficit situation despite being on the business end of a record tax increase.
The Fair Minimum Wage Act of 2007:
“The act was a component of the new Democratic majority’s 100-Hour Plan in the United States House of Representatives. It was introduced into the House on January 5, 2007, by George Miller (D-CA) and it was passed by the House on January 10. All 233 House Democrats voted “Aye,” and 82 Republicans joined them. 116 Republican representatives voted “No,” and 4 representatives did not vote. President Bush advised that the bill should include tax cuts for small businesses that could be harmed by the wage increase, and on January 24, 2007, a cloture motion in the Senate failed as 43 Republican Senators (all but 5) rejected the bill without the tax cuts, opposing all 47 Democrats who were present for the vote. Once tax cuts were added to the bill, the Senate passed the amended bill 94-3 (3 Republicans opposed and 1 did not vote; 2 Democrats did not vote) on February 1, 2007.”
(http://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007)
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More backwash from the Democrat takeover in 2007.
As I said the bill was signed into law on May25, 2007 by none other than Pres. Bush, a Republican (could have vetoed it, which he did not do).
That doesn’t mean it was a good idea, which is the point of this post.