Why Raising the Minimum Wage is a Terrible Idea

35 comments

Posted on 14th February 2013 by Darwin in Economy |Politics

The biggest problem with Americans today, and the politicians that pander to them, is that they make choices based on emotional effect and not on data.  This is why there’s no outrage over the budget-busting compensation of public sector employees like teachers, firefighters and police (yes, they all do important jobs, but the free market should dictate their salaries and compensation, not union thuggery and fleecing of the taxpayer), why nobody cares about all the stupid stimulus bills that had no impact other than to further increase our national debt (and hence, debt servicing costs), why people think price gouging is bad (gouging is GOOD) and of course, why Americans love a minimum wage.  To add insult to injury, Obama used emotional platitudes to highlight why America needs to raise the minimum wage yet again.  It is a terrible idea; here’s why:

  • Forced Overpayment for Labor – I’m sorry, but someone should be paid what they’re worth to the employer.  If it’s an absolutely zero skill job that just requires a body, why is the government mandating you pay them any set wage rate at all?  Think like an employer.  Consider a dishwasher.  There’s no prior experience required, no special skills and easily replaced.  Many restaurants use illegal immigrants for this type of role anyway, but let’s say they’re by the books and paying the full wage, payroll taxes (people forget about all the additional expenses business incur when something like this is proposed) and all the other costs associated with employing someone…

…continue reading Why Raising the Minimum Wage is a Terrible Idea

35 Comments
  1. Hollow man says:

    It a great idea. I will be a billionaire that much quicker. It is one way to force computer money into physical fiat then back to the cpmputer for everyone, so we can keep up with our billions maybe even trillions while we starve to death.

    14th February 2013 at 10:56 am

  2. DaveL says:

    Hey Obamofo, why don’t you just raise the minimum wage up to $200 per hour so that everyone is in the new 39.5% tax bracket and we can pay off the debt. What a fucking mocha mullato grande he is. Raising the minimum wage is followed by raising the minimum prices of everything. A sure winner.

    14th February 2013 at 11:10 am

  3. Stucky says:

    The SAME complaints against minimum wage increases are made EVERY time, without fail.

    The minimum wage on my first job was about $1.35. I suppose you’d be happy if that was still the rate? Or, maybe we should just go the Chinese route … $2 a day, flat rate, take it or leave it, fuck off.

    If a company can’t make a profit paying a minimum fucking wage then they have no business being in business.

    14th February 2013 at 11:40 am

  4. JIMSKI says:

    @ Stuck

    So how much is the job of placing a can of soup label out on a shelf worth? if it is worth 9 bucks an hour to stock soup on a shelf then how about my lead technician. Currently he has a lab scope hooked up to the cam and crank sensors on a Toyota looking for an intermittent glitch of less than .5 milliseconds that is causing a shudder complaint above 55 mph. Or we could always guess like the dealer did and did not fix the car. We pay our top tech about 4 times minimum wage and he has the education and real world experience to race electric cars in his spare time.

    14th February 2013 at 11:55 am

  5. TPC says:

    I’m kind of on the fence about minimum wage.

    On the one hand, we have a labor surplus, economics dictates that lowering the minimum wage will open up positions for people in the ultra-unskilled category.

    Unfortunately I don’t think that would work in this country. Thank to government mandates, the cost of having having people on the books for even just $1.50 an hour would still be a massive cost to the company.

    This problem is far too massive than to simply say “raisin Min wage means peeps got mo’ money!”

    14th February 2013 at 12:33 pm

  6. card802 says:

    There should not be any mandated minimum wage. Fuck minimum wage.

    I was fired from waiting tables where I made $1.10 an hour plus tips, my next job was washing dishes for .90c and hour, I then went to work as a bank runner where I was paid $2.20 per hour.

    Left all that for a construction job where I made $4.50 and hour, got married (1980) had two kids with a wife at home.

    I knew I could do better so I kept at it, working my ass off to better my situation.

    And here I am, small business owner where I employ men who are paid based on merit, not some stupid fucking mandated law.

    If Obama raises the wage, which I have no doubt he will because he has no business sense, we will see unemployment rise, but not the reported number.

    All praise obama. Do it, lets get this over with.

    14th February 2013 at 12:40 pm

  7. sangell says:

    It might be better to look at raising the minimum wage as a tax increase on business. It is unlikely a minimum wage earner will themselves pay much if any income tax but the employer will have to pony up 12+% in social security plus medicare tax on any increase in the minimum wage. So whatever benefit it offers the worker it is also a windfall for government revenue too.

    14th February 2013 at 12:56 pm

  8. Stucky says:

    “So how much is the job of placing a can of soup label out on a shelf worth?” — JIMSKI

    OK. He’s a dumbass and he ain’t worth a wooden nickle. Get rid of his sorry ass.

    Then, eventually the grocery store will have nothing on its shelves. Ask me then “how much is he worth?”

    14th February 2013 at 1:00 pm

  9. Eddie says:

    To me as an employer, minimum wage is irrelevant.

    Anyone I could hire for minimum wage would be worthless to me. Even though the jobs I have to provide are not rocket science, they do require someone with reasonable intelligence, some hustle, some willingness and ability to get along with patients and other employees, and of course, a dedication to showing up day in and day out.

    You will not get any job applicants with any kind of maturity or work ethic for anywhere close to minimum wage. And if I hired someone who lacked those qualities i mentioned just to save money, I’d be shooting myself in the foot.

    A tiny business with 5 to 10 employees is not able to function (read generate profits) with even one person not showing up…and it’s an observable fact that when one employee starts to take advantage of paid sick days, that the calling-in-sick disease starts going around a small office like a virus. In order to keep the whole team happy and functioning well, there cannot be resentments arising over preferential treatment.

    As an employer I really have to be sensitive to what a true subsistence wage really amounts to, and not what the government says it is. Because working people have to make enough money to somehow pay rent and put basic food on the table. If they can’t, they are living in a state of ongoing collapse, and will not be a stable employee.

    In my field we have real difficulty as employers, because the business does not have the cash flow to pay a single mother with two kids (our typical job applicant) a wage high enough for her to really make ends meet…she must have other income, from a boyfriend, parents, a second job…something. And our lowest starting pay is always at least 25% over minimum wage. But no family can live on one income in that range. It just isn’t possible.

    Stable ,happy employees, who stay with me for years and years, are always married, with stable functioning spouses who work too. It isn’t about how much I am able to pay as much as it is about forming a working life partnership, making a resilient family unit.

    Now, how could Obama do something make that happen? Something to promote functioning nuclear families? Something to encourage couples to stay together and share responsibility for raising their own children? Hmmm.

    14th February 2013 at 1:08 pm

  10. anotherjuan says:

    i don’t recall the hourly rate at my first job. i remember one of the old guys grousing that if cigarrette prices ever went to 50 cents a pack, he’d just effing quit smoking.
    prices rise after the minimum wage rises. i had a moment back in the 80’s when i realized, if i am making 2X the minumum and the minimum just went up but my pay didn’t, i just took a pay cut. it bothered me all day.
    either get rid of the minimum or set a pay range. illegal hires are attractive because they have no minimum, their pay is based partially on performance. what a concept!

    14th February 2013 at 1:11 pm

  11. card802 says:

    Wages, just like any sales transaction should be a mutually agreed upon arrangement by both parties. Free market stuff.

    A employee must produce more for the employer then he cost the employer, or the employer goes out of business, Econ 101.
    As a employer I desire employees that can do the job, so I am willing to pay more for a more valuable employee. Good business practice 101.

    If a employee wants X per hour and he can produce more than X per hour that is a desirable arrangement.
    I give him what he wants because he is capable of producing that wage. If what I offer does not suit the employee he can leave and seek employment elsewhere.
    No matter what the president or any politician will claim, business owners want skilled employees that are worth what they ask for and business owners will be more than willing to pay for skills.

    So, if the minimum wage is raised to $9.00 but the employee can only produce $7.00 per hour I either loose money, or I fire the employee.

    As a business owner that will never receive a taxpayer funded bailout for running a business like cost does not matter, I will fire the employee, mandate or not.

    Then again, that worthless entitlement hungry fuck will receive some type of progressive liberal assistance and the government will tax me more personally and on the business to pay for their bribes.

    So I lose no matter what……shit. I picked the wrong week to try and quit (slow down) drinking.

    14th February 2013 at 1:43 pm

  12. Johnny says:

    All the business owners complaining about minimum wage can replace their employees with robots. Then come back and tell us how that works out. Can’t believe the sense of entitlement of the small business owners. They apply for govt loans /grants, try to get govt contracts, ask for govt assistance importing/exporting, pay a tax rate less than what their employees pay and still whine. Hope these businesses go out of existence.

    14th February 2013 at 1:44 pm

  13. Hollow man says:

    Me too, i hope those bussinesses go under. Then that will show everyone who is boss. The goverment thats who. A mimimun wage is not needed. Let the free market take care pf it. Cannot afford to apy a competivie wage then go out of business. Or raise it to 9 even 10 dollars an hour we will get the same thing more goverment. We headed to a place we dont want to go. So….. Enjoy what you have now. It will not be long ant this will be the good ol days.

    14th February 2013 at 2:17 pm

  14. Darwin says:

    Stuck,
    People should earn what they’re worth, not some government mandated floor. Wages in NYC have no relevance to backwoods Alabama either. If you can wash dishes at 9 bucks an hour where you can count the number of teeth in the restaurant on one hand, you’re making a killing for a no-skill job. Aside from the fact that there should be no minimum wage, let’s just agree, OK there is. Next, to arbitrarily raise it to $9? Where the hell did that come from? Why not just call it $15? How about $25? The median earning family is there, so shouldn’t all Americans be able to have an “average” income? I mean, where does it stop?

    Others,
    You’re all hatin on businesses, but think like a business owner for a minute. I know, it’s hard for some of you, but, well, it’s what makes America work, not govt drones. So, you own a grocery store. You have dozens of teenagers working there who are perfectly happy to work minimum wage (I used to be one, we all started at min wage). Now, you have to pay an extra buck and a half an hour, plus higher payroll taxes for the same exact unit of labor. Don’t you think prices need to go up to stay in business then? From a competition standpoint, sure, the grocery store across town has the same burden, so it’s not like everyone’s going to go out of business – but the costs MUST and WILL be passed on. And then you’ll all be bitchin about how food prices are going up.

    This artificially induced nonsense is a tax. It is inflation. It is not right. People should be paid what the market will bear.

    14th February 2013 at 2:37 pm

  15. card802 says:

    Darwin,

    Exactly.

    NPR did a segment on this a while ago.

    A store pays their employees minimum wage, but they can’t afford to purchase the merchandise they sell.

    Minimum wage is raised.

    Store owner must raise the cost of his product to pay for the new wage.

    Employee has the new higher wage, but they can’t afford to purchase the merchandise they sell.

    I don’t even bother to argue with people because some will never get it, and I frankly don’t give a shit anymore.

    14th February 2013 at 3:06 pm

  16. anotherjuan says:

    how will the new minimum affect eligibility for snap, ebt?

    14th February 2013 at 3:18 pm

  17. Darwin says:

    SNAP? We have people in my kid’s school district with iPhone (data plan required; my wife doesn’t even have a goddam smart phone!) and a very large, new SUV (no idea what it costs, but I can only surmise north of $35K) who openly talk about using foodstamp/debit card, whatever the thing is. I suspect the requirements are pretty lax to qualify. making min wage even at 9 bucks, I can only assume a family of 4 still gets the full few hundred bucks a month.

    14th February 2013 at 3:21 pm

  18. Stigmation says:

    Yeah earn what they are worth. Like the POS politicians are worth what? I wouldn’t let most of them stock my shelfs, or wash my underwear. People are paid more than they are worth ALL THE FUCKING TIME!

    Mr Magic Underpants worth 25 million a year for strip mining companies? Bill Gates for population control? The cop who writes you a speeding ticket on your way home? Pay has more to do with being in the right place and knowing the right people.If I had a choice on going to McDonald’s and paying 50 cents more for a crap burger, who would I want that money to go to?

    The corporation as obscence profit, or the guy or gal busting their ass? Yea McDonalds and all the other corporations really do need more money….

    14th February 2013 at 3:43 pm

  19. underfire says:

    So we mandate that American business pay American labor a minimum of say ten dollars per hour. But how does that work when Americans are free to, and do, purchase stuff made with 1 dollar an hour labor?

    It doesn’t. Note the 50 billion monthly trade deficit, the staggering and still ongoing debt accumulation and the fiscal catastrophe dead ahead.

    No shortage of disastrous ideas coming out of DC.

    14th February 2013 at 3:51 pm

  20. IndenturedServant says:

    Stucky, like Darwin said, if $9/hr is a good idea why not $10? Why not $20? Why not $200?

    If any one of those numbers is good and agreeable with you then that line of thinking means they are all good. Why not $20,000/hr?

    Forcing an employer to pay any arbitrarily mandated wage is complete bullshit. The employer only has so many options…….reduced profit, fewer employees, raise prices, (which just cancels the advantage that new minimum wage provided to the employee) or go out of business.

    Consider the case of a business where 100 min wage employees are employed. The govt comes and and requires that they all get a $2/hr raise. What does Stucky the business owner do?
    I_S

    14th February 2013 at 4:36 pm

  21. IndenturedServant says:

    Johnny posted just to let us all know he’s a complete fucking idiot who has no concept of just how stupid he is. That or he’s a troll.

    He should really quit watching the MSM for his info.
    I_S

    14th February 2013 at 4:45 pm

  22. Stucky says:

    Darwin

    I’m with TPC in terms of being on the fence regarding minimum wage.

    On the one hand I despise government and their meddling ways. As you rightfully said, where did $9 come from? Make it $100!! The potential for abusing the business owner is great.

    On the other hand, I simply do not trust corporations. As llpoh reminds us, they exist for one reason only; to make a profit. The potential for abusing the worker is great.

    So I don’t know.

    The best thing would be to never rely on a paycheck. Be in business for yourself. Set you own “minimum wage” based on your own smarts and hard work. Of course, not everyone can do that.

    14th February 2013 at 4:46 pm

  23. Stucky says:

    “Consider the case of a business where 100 min wage employees are employed. The govt comes and and requires that they all get a $2/hr raise. What does Stucky the business owner do?” —–IS

    There are a number of possibilities;

    1) I raise the price of my product.

    2) I reduce the workforce.

    3) I increase efficiency.

    4) I increase marketshare.

    5) Move the biz to China.

    6) Fuckit. Just quit.

    14th February 2013 at 4:54 pm

  24. ThePessimisticChemist says:

    @Stucky –

    I think my issue is that they are changing the wrong variable.

    Right now the cost to the employer is more than just the wage, and all of these government mandated extra costs have run rampant in recent years.

    Add in things like EEO and unions with more power than brains, and we get shitty situations like this.

    Top it off with the outsourcing of a substantial chunk of the “medium” skill level jobs, and we have a completely disrupted economy.

    Leave minimum wage alone until we get government spending under control, and figure out a new tax code. THEN we can fuck with minimum wage.

    14th February 2013 at 5:05 pm

  25. Ant says:

    “Johnny says:

    All the business owners complaining about minimum wage can replace their employees with robots. Then come back and tell us how that works out. Can’t believe the sense of entitlement of the small business owners. They apply for govt loans /grants, try to get govt contracts, ask for govt assistance importing/exporting, pay a tax rate less than what their employees pay and still whine. Hope these businesses go out of existence.”

    Most incomes under 50K or so, depending on family size etc. pay no federal tax.
    You are spouting information not knowing facts.
    Business owners take all the risk and create jobs. That is one of things that make our country great.
    Raising the min. wage doesn’t make sense right now. What will happen to people currently making $9 – $12/hr? Won’t that rate go up as well? Who will pay for that? The CONSUMER!
    One starts a construction business, and the current rate for laborers in the area is $20.
    The new business owner plans on paying $12hr. How long do you think the end product will be able to compete in the free market?

    14th February 2013 at 5:56 pm

  26. TeresaE says:

    Hey all!

    Glad to see this addressed Darwin. When I heard (the next morning, I refused to watch his lies live) about this, I became enraged. Here’s TeresaE’s top reasons why raising the middle wage will only fuck the working harder, while enriching the richest and shoving more people out of jobs and into government programs.

    Johnny, you math challenged douche, I’m talking to you. (ps, as this pisses me off and I’ve just come off a five day trip to the “happiest place on earth” if you are easily offended, stop reading now).

    1. When you raise the minimum wage you are only affecting the BOTTOM FUCKING RUNG, of jobs.

    2. Every GOOD EMPLOYEE, whom has shown up, improved their skills, busted their ass, did what they were told and if the boss is really lucky a little more, has already worked their way up and out of minimum wage.

    3. In most low-skill/wage shops (including fucking WallyWorld and McDonalds, along with all the Mom’s and Pop’s and movie theaters), those that have BUSTED THEIR ASSES are probably making between $2-$3 more an hour than the fuck-offs and new hires.

    4. Raising the minimum wage gives anyone that has worked harder a fucking immediate paycut. IMMEDIATELY. I have NEVER seen an employer be able to afford to give EVERY employee a comparable pay raise. ALL customers shop on price, NO business can just up their prices overnight to make up for the hit ($2 PLUS workers comp, unemployment, social security, etc., etc., )

    5. When you are unable to raise your prices to cover your costs you can do one of two other things to stay in business. 1 – you can cut costs the same amount so about 30%, easiest is to cut work force or 2 – you can cut quality and try to hide it.

    6. Michigan pulled this shit during our “one-state recession” and our unemployment rate SKYROCKETED.

    Now, for the good news.

    1. Raising the minimum wage will knock a bunch of low-income people off food stamps and government assistance. Higher pay means fewer qualify.

    2. The costs of everything will immediately go up (just like it did last time), thus hiding our continued productive shrinkage and helping Benny and Timmy and Obama and Pelosi and Dimon and Blankfeld and a whole bunch of rich elitists continue to steal from our great-grandchildren.

    So, in closing, raising the minimum wage will reward the fuck-ups, give a paycut to anyone else (other than the elite and federal unionist with an inflation based contract), and keep the game afloat.

    Added bonus, millions more will attempt (and many will succeed) in permanently leaving the workforce to join the rolls of the early-retired disabled and baby-popping poor everywhere.

    I can’t fucking wait.

    PS – I hope Johnny is one of the first let go to make sure that the stupid and lazy, or teenager living with mommy & daddy, can buy another video game or app.

    Ain’t central control just grand? I know it is.

    14th February 2013 at 6:42 pm

  27. TeresaE says:

    To whomever is thumbs-downing the truth. I have but ONE question for you.

    Are YOU going to get a 30% raise when the minimum wage goes up?

    THIRTY percent. Are your sales up 30%?

    Good luck with that. Everything will cost more, those that have learned/earned skills will not get paid more.

    Pretty simple equations, there are no magic money trees and you have no idea how tenuously most small businesses are hanging on.

    Whatcha’ going do when your expenses go up and your pay doesn’t and the guys that pay the bulk of your trash and fire and schools and cops go out of business?

    They come after you. Keep supporting theft and calling it fairness moron, after all, you will pay for it just like all of us will.

    Enjoy.

    14th February 2013 at 7:17 pm

  28. Stucky says:

    Johnny, aka, “math challenged douche” (lol)

    I want to thank you very much for posting here. Otherwise, I am afraid TeresaE would have unleashed hell on me. You’re the best. Keep posting.

    14th February 2013 at 7:18 pm

  29. Chip D says:

    Labor is a product, just like other products. It is an issue of supply and demand. When the government steps in a fixes a price, they throw off the whole equation. Would anyone consider setting a maximum wage?

    14th February 2013 at 7:56 pm

  30. IndenturedServant says:

    Stucky says:
    “1..2…3….4…..5…….6″

    Yep, and when it’s all said and done, mandated minimum wages have done exactly one thing…..MAKE MATTERS WORSE. That seems to be a pattern for the govt when they “fix” things.

    If employees don’t like low wages then it is incumbent upon them to improve their skill set & work ethic to make themselves more versatile.

    Of course, if we could somehow put an end to the constant, never ending devaluing of our currency, we might not even have to debate shit like this. That however would take $$ out of TPTB pockets and they won’t tolerate that so we soldier on. Ain’t Central Banking grand!!??
    I_S

    14th February 2013 at 8:02 pm

  31. Chip D says:

    Look at the Labor market in North Dakota. It is booming and employers are paying a premium because their supply of workers of all types is very low. That is how the system is supposed to work.

    14th February 2013 at 8:15 pm

  32. printmemoney says:

    This is such a red-herring issue. We should give up on the governments finances and worry about things like NDAA, 2nd amendment, TSA everywhere, no accountability for the murder of Dorner, or the creation of such.

    I think arguing about where gov’t should meddle and shouldn’t (minimum wage, acts about employees telling each other what they make, and the rest) is just arguing about symptomatic intrusions in our lives.

    Every new law congress makes is a fucking mistake. From now on, we need the repeal party. Just start repealing the idiocy.

    There’s a crash coming minimum wage or no minimum wage….don’t make it legal to kill me afterwards.

    Darwin- I liked your blog entry on the issue. I hope that my post is not misconstrued as a plea for you to stop posting.

    14th February 2013 at 8:31 pm

  33. Novista says:

    Johnny

    You have no fucking idea about small business owners. There are some here who present facts to support the reality of how close the margins are to closing the doors.

    Using McDonalds as an example shows the depth of your knowledge. Screamingly shallow.

    ‘They’ … one big aggregate, code for the politics of envy and class war. Fuck your ‘they’ and you too.

    Before the GFC there were 6 million employer firms in the U.S. 5.4 million of them were small businesses, average 20 employes. A lot would have fallen by the wayside in the last six years, so much for the ten years of seven days a week and long hours just to get it established.

    Stucky

    There’s a nice chapter (XIX) on minimum wage in Hazlitt’s “Economics in One Lesson”.

    14th February 2013 at 9:59 pm

  34. Stigmation says:

    Since when does the government give a fuck about small business? Not that I have seen for a long time. If they did, they would have been exempted from all these bullshit laws in the first place. The goal is to kill small business, not help it. How do you expect the gubbermint to control all this peons striving for independence. Better to be under the loving blanket of state sponsored corporate fascism.

    The whole system is fucked.Nobody seems to mind that
    Corporations control our gubbermint
    Rake in billions in profits
    Pay CEO a king’s ransom to destroy the industrial base of this country
    Produce toxic food, drugs, mindless video games that are destroying our republic

    Our country was founded on the principals of the goodness of men, the rule of law and a God fearing population.

    We have none of these any longer

    You pay either way here. If you don’t pay a living wage you will pay in taxes for the FSA army. If you do pay a living wage, we all pay in higher prices. Either way the average guy is fucked.

    15th February 2013 at 8:37 am

  35. Tommy says:

    I am not sure anyone here has studied economics but if you pay people more they have more disposable income. If people have more disposable income they buy more and increase the demand of all goods in services. If the demand for all good and services goes up more productive people will get payed more (or should get payed more). It is basic economics and the reason why the government gives out stimulus packages because they want there to be more money in the economy. It is very simple in theory more money in the economy increases aggregate demand as aggregate demand increases so does aggregate supply. It has a multiplying effect and it is important to understand that money is not a resource and has no real value, it is “fiat” it simply gets people back to work and they can produce something of value. Do some actual research on the subject like read a school text book not watch TV news and when you have some actual understanding of the subject then comment and we can have a logical debate on the merits of raising minimum wage.

    20th June 2013 at 5:51 pm

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