When you raise the minimum wage $1, how does it work? We must always think about the unintended consequences.
My friend employs more than 40 people in two businesses that are directly or indirectly affected by the wage increase. Being a good employer, he decided to plan for the future by having his accountant run a spreadsheet accounting for the minimum wage increase. The result showed that he would have an increase cost for labor of $60,000 for the year.
Can you imagine that he has to increase his income by $5,000 every month or he could lay off every ninth worker?
How does this affect our economy? When you raise the wage of the workers on the bottom, you must also raise the wages of those above them, lest you have all workers making the same wage regardless of time on the job. Farther-reaching effects are yet to be understood and include those of unintended consequences.
Remember when the “cool kids” were quoted as saying they were “too cool for school?” These people today are the ones competing for those minimum-wage jobs forevermore. Their only hope is to return to school and improve their educational background. These are the people who compete with teens and college students who need these jobs to help with their educational goals.
Who are those who think the minimum wage raise is a good idea?
What, you say, can be the drawbacks from raising the wages by demand? The far-reaching effects can be:
Remember, in our economic system, the normal way that wages are increased is that demand for those services are increased. This is how it has always worked when times were good. By increasing our wage scale by command, the normal way the economy works is perverted.
This new minimum wage scheme is doomed to fail. How do we fix this mess?
Rod Keck is a resident of Fairfield. Reach him at firstname.lastname@example.org.