The Nationwide 15 Dollar Per Hour Battle Cry Will Be Workers` Swan Song
I don't get it. After 78 years of raising the minimum wage, it's never been enough to qualify as a living wage. Listen to any liberal idiot who doesn't understand economics and he will assert that it improves workers' standard of living, reduces poverty and income inequality, helps with morale and forces businesses to be more efficient (1).
Well here we in 2016 amid calls for a minimum wage of $15.00 because all the previous minimum wage increases didn't do what they were supposed to do. In fact, the real value of the minimum wage is less now than it was 5 decades ago and wage inequality is greater now than ever before in our history (2).
Despite combining the minimum wage with food stamps, vouchers to help pay for rent, heat, healthcare - all the social safety nets of the great society and Obamacare put together, despite all that, our poor are just as deeply mired in poverty or worse as they were in 1965.
Isn't it time to admit defeat? To acknowledge that the minimum wage and all the programs for the poor have led to declining real wages for many workers and high poverty rates for families with children?
Even if we set 15 bucks an hour as a minimum wage, a decade later workers will be asking for $30 an hour because food, rent, heat, and clothing will be twice as expensive as before (3).
The only products that may see smaller increases in price will be those made by companies who fired their workers and automated rather than pay exorbitant wages. Some of my readers will recall how McDonald's restaurants will look with $15/hour workers:
I believe Walmart's recent announced closings of more than 150 stores is in anticipation of new increases in the minimum wage. Watch in coming years for Walmart to be almost completely automated as they rely more and more on RFID technology.
As for businesses that cannot automate - they will take two employees making $7.25 an hour and fire one while dumping twice as much work on the other who will earn $15. Or if that's not feasible then fire both of them and hire undocumented aliens at the old wage or less. Why didn't the employer use illegal immigrants before? Because he wasn't forced to.
When politicians promise to raise the minimum wage they are engaging in a hoax for mainly feel-good purposes (4) that only end up turning the supposed beneficiaries into victims.
Higher wages should be the result of higher productivity. If they are the consequence of political action then they only raise the cost of living which nullifies any increases in higher wages. Let's not be stupid.
ENDNOTES
(1):
Whistling In The Wind, 27 Jul 2012, The Advantage Of The Minimum Wage
The minimum wage has many benefits. It reduces inequality by redistributing income from business towards low wage workers. It provides a boost to the economy as low wage workers spend almost all of the money rather than saving it as richer people do. It also reduces poverty and directly helps the poorest workers. By increasing workers wages it improves their morale and therefore productivity as well as reducing turnover (a major expense in low wage industries like food & drink).
(2):
Economic Policy Institute, 21 Feb 2013, Declining value of the federal minimum wage is a major factor driving inequality
Between 1973 and 2011, the median worker’s real hourly compensation (which includes wages and benefits) rose just 10.7 percent. Most of this growth occurred in the late 1990s wage boom, and once the boom subsided by 2002 and 2003, real wages and compensation stagnated for most workers—college graduates and high school graduates alike. This has made the last decade a “lost decade” for wage growth. The last decade has also been characterized by increased wage inequality between workers at the top and those at the middle and bottom, and by the continued divergence between overall productivity and the wages or compensation of the typical worker. This divergence has been demonstrated anew in the current recovery over 2009–2011 as real wages fell for the bottom ninety percent of the wage distribution but rose for the top five percent (Mishel and Finio 2013).
(3):
The Sovereign Investor, 25 Feb 2014, Raise the Minimum Wage, Raise the Cost of Living
History Shows Wage Hikes = Higher Inflation
I pulled every minimum-wage increase in America back to 1938, the year the first minimum wage was instituted, then cross-referenced those wage hikes with the monthly change in the inflation rate over the next one and two years following the initial wage hike … as well as what inflation looked like in the year prior to the wage hike.
The results are quite interesting. They show that, contrary to the puffery I hear from lots of economists today, inflation does, in fact, correlate with minimum-wage increases – especially when wage hikes are large and occur after a long stretch of stagnant wages.
The $10.10 that Mr. Obama and the labor sycophants in the Democratic Party are proposing – a 39% jump from current levels – would be the second-largest minimum-wage increase in U.S. history. And it would come more than five years after the last wage hike. Over the last 76 years of minimum-wage increases, parameters of that sort have led to inflation that runs at a hotter pace one and two years out than it ran the year before the wage hike took effect.
(4):
New York Times, 26 Jul 2015, Raising Floor for Minimum Wage Pushes Economy Into the Unknown
“Raising the minimum wage for everyone says something profound and profoundly good about the society we want to live in,” said Dan Cantor, national director of the Working Families Party, which has helped secure minimum wage increases in several cities and states across the country. “That all work has dignity and worth, and people deserve a living wage.”
