Raising Minimum Wage
I received a message about minimum wage that said – Bernie Sanders said, “They’re just factually wrong. In my state of Vermont, our minimum wage is $8.60 compared to the national minimum wage of $7.25. We have one of the lowest unemployment rates in America. You have states where there is virtually no minimum wage at all, and their unemployment rate is much higher. The facts just don’t bear it out. The reality is that if we raise the minimum wage to $10.10 an hour about 30 million Americans would get a pay raise, and 88 percent of them are adults.”
First things first – never trust another word out of the mouth of Bernie Sanders. That guy has a nasty habit of not fact-checking. Second – those statements were made back in December of 2013, and while I am pretty sure these numbers were never accurate, they surely are not by now. Third – based on his statement, I believe that random drug screenings should be mandatory for government workers from here on out. Finally, this is probably one of the weakest positions I have heard yet in the minimum wage debate, not to mention factually inaccurate. Let us explore some of the REAL numbers regarding his unfounded claim and then investigate the cause and effect of it.
75.9 million: The number of hourly-paid workers in the United States today. Or roughly 24% of the entire population.
47 million: The number of Americans who live on incomes below the federal poverty line. This equates to 14% of the population.
3.3 million: The number of Americans earning the minimum wage or below. That equates to 1% of the United States. And half of these earners are under 25 years old. Two-thirds of that are working part-time.
750,000: The minimum wage earners living below the federal poverty line. This is only 1.6% of those in poverty and 0.24% of the country. – (Econ 21)
People at or below the federal minimum are disproportionately YOUNG: 50.4% are aged 16 to 24; 24% are teenagers (ages 16 to 19). Most (77%) are white; nearly half are white women. Largely part-time workers (64% of the total). A lot of people were not ready for that statistic. (PEW)
As you can see, Bernie is either living in “La-La Land” or cannot do the math. Lumped together and rounding up, the group in question represents roughly 4% of the nation’s 75.9 million hourly-paid workers and 2.6% of all wage and salary workers. So basically, the nation is trying to make a decision that will affect everyone over a tiny percentage of people who are screaming REALLY loud about increasing the minimum wage. Leading the campaigns are unions, workers, and politicians, and it is all attached to a moral position that states it should be possible to support a family on minimum wage. Does this sound crazy to anyone else but me?
First, it is normal for earners under 25 years of age to have their earnings relatively low. That is the point. They earn lower wages because they are not skilled yet. Their wages increase as their skills and abilities, and knowledge increase. What is NOT normal is for one person to work an ENTRY-LEVEL job and expect to support their family, new car, new house, and so on and be paid a NON-ENTRY LEVEL wage. This is unreasonable for numerous reasons. Would it be nice to flip burgers to support a family? Of course, it would, but it’s unreasonable to expect that. Raising the minimum wage to $30K a year equates these minimum wage jobs with jobs like RNs, Plumbers, Construction workers, truck drivers, crime scene cleaners, etc. I believe that this is an insult to those hard workers. Would these skilled folks get a raise when the minimum is forced up? Probably not.
Think about this for a second: that self-check scanner at the supermarket that everyone hates… do you know how those got there? Forcing the minimum wage to increase forces employers to pay workers more and find alternative solutions to afford the mandated raise. But the part that most people fail to realize is that if a business is going to be forced to provide a raise, they are going to want to hire higher-skill workers instead of no-skill workers and then turn to robots or self-order kiosks (as demonstrated) to replace the lower or no skilled areas. The evidence proves this. Why is this even still up for debate?
Of course, there is no debate when you are talking facts. This is highly researched and not founded on moral blur. Here is an excerpt from a study that the CATO Institute did on the subject:
There is no good theoretical reason why a minimum wage, if it is binding on some employers, would have anything but a negative effect on employment. If the labor market is competitive (which it certainly is, especially at the bottom of the employment ladder), then any employer will let go—or not hire—an employee whose marginal productivity is lower than the minimum wage (plus payroll taxes and other employment costs) that the employer is obliged to pay.
A large number of empirical studies have confirmed that a minimum wage, if set above the equilibrium wage level, will destroy jobs. In their seminal 2008 book Minimum Wages, David Neumark and William Wascher present a review of empirical research on minimum wages in the United States. They conclude that there is plenty of evidence that “minimum wages reduce employment opportunities for less-skilled workers,” and they admit that their own research changed their prior views on the weight of evidence regarding the effects of minimum wages.
Economically speaking… raising the minimum wage (again) will just put more people out of work. I do not want to raise the minimum wage because I care about the many young mothers this affects. They need a job. They need the money. I don’t want their jobs replaced by robots, and I sure don’t want them to rely on government assistance. Understand that minimum wage was never meant to be a “living wage.” There is an education/skill gap and an actual value gap… and it’s just going to get worse because of this moral blur. Because of this push, robots will likely take from 45% to 80% of all the current lower-level jobs over the following few decades – studies support this. This is especially true about jobs like store clerks and fast food. What are these low to no-skill workers going to do then?
Additionally, raising the minimum wage will only exacerbate inflation and price hikes. This means that prices on the basics will increase, making it more difficult for those just pushed out of the job market and replaced by higher-skilled workers or robots to purchase the things they need. When I hear people express their desire to raise the minimum wage, I wonder why they hate the lower class so much. Why would anyone wish such misery on another?
I might support it if our currency wasn’t fiat, perhaps, because remember: in 1913, you could buy a gun and a nice suit for an ounce of gold. Today, you can buy a gun and a suit for an ounce of gold. The same cannot be said regarding using the dollar. The minimum wage is not the problem. It is simple. If you want to help the lower class out, stop trying to hurt those who employ them. Instead, make it easier for them to employ more.
You might also want to read this: FORBES: A $15 An Hour Minimum Wage Would Be a $17,500 A Year Tax On Jobs (CLICK HERE)29