Friday, October 31, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Minimum wage hike a true political question

By
From page A9 | August 03, 2014 |

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?

  • The present minimum wage employees.
  • Those people who do not understand how our economy works.
  • Those people who believe that others will benefit from the increase.
  • People who pat themselves on the back, because it will reflect well on them politically by demanding raises and making it happen. But will they accept the economic consequences of this raise?

What, you say, can be the drawbacks from raising the wages by demand? The far-reaching effects can be:

  • You may notice that your favorite restaurant will have a new menu.
  • You may notice that the prices have increased.
  • You may notice that food stuffs may rise by at least 10 percent.
  • You may notice other items will most likely increase in price.
  • Because the base wage has been raised, those people working for tips will most likely see an unpleasant reduction in tips.

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?

  • We get our nanny state government out of the way of business.
  • We look to our local representatives and question their views on these subjects.
  • We vote them out of office if they don’t do what we sent them to do, in their respective offices.
  • We educate ourselves before we go to vote.
  • We determine which candidate best reflects our views and feelings. Remember, all politics are local.

Rod Keck is a resident of Fairfield. Reach him at keckme@att.net.

LEAVE A COMMENT

Discussion | 29 comments

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  • CD BrooksAugust 03, 2014 - 5:42 am

    Sorry for my unpopular and repeated message, I think it is out of control. Roll it back to $5 an hour.

    Reply | Report abusive comment
  • PornacAugust 03, 2014 - 7:52 am

    Keep them minimum wage folks on Food Stamps where they belong!

    Reply | Report abusive comment
  • PornacAugust 03, 2014 - 7:54 am

    Sorry for my unpopular and repeated message.

    Reply | Report abusive comment
  • mike kirchubelAugust 03, 2014 - 8:52 am

    What a pile of keck. I especially like his self-serving line about who wants to raise the minimum wage: "Those people who do not understand how our economy works." Where did you get that little factoid, Keck?

    Reply | Report abusive comment
  • Jealousy DetectorAugust 03, 2014 - 11:19 am

    What a pile of kirchubel!

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 9:13 am

    Are we talking about the federal, state, or local minimum wage?

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 9:23 am

    I don't see Rod's "far-reaching effects" as too high a price to pay for putting more money in the pockets of workers.

    Reply | Report abusive comment
  • JagAugust 03, 2014 - 9:31 am

    Goop question RW, if California would just stay with the federal wage that would at least detour business from leaving for that reason alone, my own hidden agenda is I would love for California to raise it to $20 an hour because I want out of here and I would love for my company to pack up and move.

    Reply | Report abusive comment
  • Voter IDAugust 03, 2014 - 4:11 pm

    Jag Remember California is a very liberal state run by the Democrats if they do not raise the minimum wage or as they like to call it a living wage they will not get reelected and if the do raise it those business that will have to pay it will ether leave the cites or state or they will just go out of business. Any way you look at it the liberal Democrats win. If the wages go up the people are happy and they continue to vote them into power and when the people loose their jobs because business shut down or leave the state the people are more dependent on the government to provide for them. So as you see it is a win win for the Democrats running the state. Remember to demand that every one that votes show a proper and valid id.

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  • Rick WoodAugust 03, 2014 - 5:36 pm

    Back AGAIN VID? What do you do about vote-by-mail? I'll keep asking; you keep not answering.

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  • Mr. PracticalAugust 03, 2014 - 10:22 am

    Fortunately, it won't rear its ugly head in California again this year. Before last year's bill took effect in July, Mark Leno and Darrell Steinberg (beholden to the unions) proposed a 62% increase over the next 3 years. I work with a woman that owns 3 full-service breakfast restaurants and averages about 120 employees. If that bill had passed (it was defeated in the Labor Committee 3 weeks ago), her increase in payroll would have been over $20,000 per month. During the recession, revenues have dropped and the cost of doing business has continued to increase dramatically. She has already cut labor and raised menu prices as much as possible. She has no where near $20,000 in net profit a month in the business. rlw and Mike, what do you suggest she do? In January, she will have to comply to the Obamacare employer mandate. She already provides a healthplan and pays half of the premium. Very generous in her industry. To comply, her employee's contributions cannot be more than 9.5% of their income. Her contribution will have to increase to 90 percent. Or she can cancel the plan and pay the $2,000 per employee annual penalty. rlw and Mike, what should she do?

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  • Voter IDAugust 03, 2014 - 10:33 am

    I do not think rlw or mike have an answer for that other then stop eith the foxism and the mininim wage should be rsised because the workers can not live on mininim wage that it is today. That is unless they want to start a busisness and employ those that will be out of work. Remember to demand that peoplevhave to show a vaild id when they vote.

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  • Voter IDAugust 03, 2014 - 3:56 pm

    Like i said Mike and rlw have nothing to say. They are just empty suits or in mikes case empty t-shirt. Remember to demand that you have to show proper and valid id to vote.

    Reply | Report abusive comment
  • JagAugust 03, 2014 - 11:01 am

    It may be dead in the state but you still have these cities going out and doing it on there own, San Francisco is voting on $15 in November and I have little doubt it will fail also Richmond and Oakland.

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  • Mr. PracticalAugust 03, 2014 - 11:07 am

    Yep, municipalities are getting in the act. San Diego has really created a mess. City Council passed it. The mayor is going to veto it. The council has the votes to override the veto. Businesses are already getting signatures for a referendum that would put it on the ballot.

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 5:32 pm

    Mr.P: She should come up with a new hypothetical.

    Reply | Report abusive comment
  • Mr. PracticalAugust 03, 2014 - 5:49 pm

    Meaning?

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 5:54 pm

    Meaning you can draw up a hypothetical that has no answer out of a bill that didn't pass or facts that aren't verified.

    Reply | Report abusive comment
  • Mr. PracticalAugust 03, 2014 - 7:34 pm

    So what you're saying is you won't answer a hypothetical question. Keep an eye on Seattle.

    Reply | Report abusive comment
  • JagAugust 03, 2014 - 7:54 pm

    yep pretty much,,, but it wont be a hypothetical much longer and maybe your friend will contribute to more of the empty buildings in Fairfield sad to say

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 10:34 pm

    Just remember "one crazy man can ask more questions than a thousand wise men can answer." It's great sign of insight to ask unanswerable questions.

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  • Mr. PracticalAugust 04, 2014 - 5:58 am

    rlw, there is nothing "crazy" about these questions. Thinking hypothetically is how you think things through to come to reasonable conclusions on an issue. Something many legislators don't do. The new minimum wage will increase her payroll around $8,000 per month. It will hurt. Along with the increase in her health plan contributions due to the employer mandate, it could do her in. 120 jobs go with her.

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 5:49 pm

    Mr.P: Note Rod doesn't mention any of those drawbacks in his list. He seems to be concerned only about the cost to consumers, not the impacts on workers or employers.

    Reply | Report abusive comment
  • rlw895August 03, 2014 - 5:46 pm

    The federal minimum wage should be the only issue. States may choose to go higher, but have to be judicious about it; they will bench off of the federal minimum wage. Localities shouldn't go there at all. The only reason states and localities are taking the initiative now is because the Party of NO controls federal government initiatives, and the minimum wage has been so diluted by inflation that it's become ridiculously low. The federal government should come up with a formula for setting the minimum wage and then leave the issue alone. The minimum wage should not be political question except when the time comes to reexamine the formula, which should be infrequent. The government has much better things to do.

    Reply | Report abusive comment
  • JimboAugust 03, 2014 - 7:15 pm

    It is nothing short of disgusting that the self-proclaimed 'greatest country on earth' is engaged in a vehement discussion on minimum wages. It's particularly offensive when politicians, charged with the will and well-being of the people they represent, oppose it while the rest of the civilized world is not only paying their workers more, but also offering them health care, more time off and earlier retirement. A McDonalds worker in Canada, for example, makes more than $10/hour, in France they make $12 per hour and in Australia it's nearly $15. The average pay for the same job in the good ole USof A is about $7.76 per hour.

    Reply | Report abusive comment
  • Salty DogAugust 03, 2014 - 10:13 pm

    Hey Jimbo. If they want to earn more money they can always look for another job that pays more per hour. They can also get an eduction so they can get a job that pays more or they can always move to one of those country's that pays more. No wait that is if they are allowed in that country.

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  • rlw895August 03, 2014 - 10:38 pm

    They can also ignore the rest of their life, like their family, and get two jobs.

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  • Rick WoodAugust 03, 2014 - 10:42 pm

    Raise the minimum wage and eliminate business income taxes. That's a quid pro quo.

    Reply | Report abusive comment
  • Mr. PracticalAugust 04, 2014 - 5:47 am

    Rick, there is no such thing as business taxes. There is either personal tax or corporate tax. If you eliminated the corporate tax, which I believe would be a good idea providing there is a major overhaul of the entire tax code, you would increase the growing disparity between big business and small business. The vast majority of small businesses pay only personal taxes.

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