My personal opinion, prejudiced by 30 years of
observation, reading, and thinking too much.
I wrote this many years ago, more than I can remember.
P.S. March 2016: Hillary Clinton lies. There is NO such thing as a "living wage" because as wages goes up, costs go up by even more. See "minimum wage" below.
Here is how the rich get richer and the poor get poorer. Congressmen, Senators, economists, and rich people also know, but they don't really want the poor majority to know. Fortunately for the Congressmen, poor people are too short-sighted and under-educated to figure it out, so Congress can keep stabbing the poor in the back and the poor think that Congress is actually helping them !
Lets say that Joe works for minimum wage, $5 an hour, then the minimum is raised to $6 an hour. Joe makes one widget an hour; when the minimum wage was raised the cost of labor for that widget went up $1 each.
How does management price that widget when they sell it? They add up their costs (fixed and variable) and one of these costs is labor. So Joes wage went up $1 and the cost of making the widget went up $1. But we are not finished; how does the business owner make a profit? By multiplying the total cost of manufacturing a widget times the percentage of profit he wants to make. Let's say 20% for example. So Joes' wages went up $1.00 but the consumers cost of the widget went up $1.20.
Then the middle man (if any) adds his percentage of costs and profits (using an extremely low 20% profit+costs margin we are now at $1.44), and then the retailer adds his percentage of costs and profits (using the extremely low 20% profit+costs margin we are now at $1.73),
Joe has more dollars in his pocket, but his BUYING POWER actually went DOWN,
because every increase in his pay is multiplied by a percentage of profit and passed on to the consumer
and JOE is a CONSUMER.
READ that last sentence again, it is the KEY to understanding.
Joe lost 73 cents on the deal, or 12% of his purchasing power.
The rich people are the owners. They don't work for hourly $$$. They make their money from the profit percentage. As the dollar inflates it goes around and around in our economy faster and faster, and each time it goes around the rich owners get a percentage of it. So as the dollar inflates, the rich make more money and the poor lose purchasing power.
What makes the dollar inflate? Your Congressman.
Everytime your congressman votes to raise the minimum wage, it jacks-up the
economy like a car-jack raises your car, but worse, because the automobile is linear,
jack the bottom up one inch and the top goes up one inch also. But the economy works on the
percentage; in the example above the bottom went up $1.00 but the top went up $1.73 or more.
The poor are able to see more dollars in their pocket, but they cannot see the loss of purchasing power, so they cry to their coungressman to give them more money and he/she happily does so because it makes their rich friends richer. Congress would have you believe that they raise the minimum wage to help you keep up with inflation but this is not true. If Congress stopped raising the minimum wage the economy would reach and maintain a stable level and there would be little further inflation.
If you don't like my argument above, try the scientific method:
In science and math, if you don't know what the result is when you change one variable, we say "let the variable go to infinity". We don't need to let the minimum wage go to infinity, just something large like $1000. All hourly employees would immediately loose their jobs; even the Government could not afford to pay their hourly employees this wage.
Politicians are already doing this, but more slowly, $1 at a time.
They are certain that you are too stupid to see the results.
However, the long term results remain the same. Well, each time Congress raises the minimum wage even $1 the least profitable businesses go out of business, or the jobs go overseas because it becomes cheaper to pay the shipping costs than to pay the mandated wage. Just because you are not aware of the destruction of the low-end businesses doesn't mean that it is not happening every time that the minimum wage is increased. Just how do you think China got all those manufacturing jobs that used to be here?
Most Union wage contracts are tied to the minimum wage, so each time the minimum wage is jacked up by Congress, all the union-members get a raise, including the West Coast Longshoreman office paper-pusher who was making $125,000 a year with a high-school diploma before the last round of strikes and raises. So here is another group whose personal greed far exceeds any concern for the welfare of their country or its economy.
Unions are an anti-capitalist, non-competitive, government-sponsored MONOPOLY.
Can Ford or GM have two unions compete against each other for its labor contracts ?
Which makes the Union a MONOPOLY.
Our corrupt government goes after supposed monopolys like IBM or Microsoft, but unions are GIVEN their monopoly power by the Government. It is decades past time for a change back to capitalism in our labor market.
And don't forget the organized crime, and violence associated with unions. Each time there is a big strike some union guy gets on a hill with a rifle and shoots truckers crossing the picket line.
What the government should do is take away the unions right to strike for raises. Unions were initially created because the government was not regulating safety in the workplace and many workers were getting killed, disabled, or injured; unions were initially a good thing. But power corrupts, and the unions were given much too much power by the government and became as corrupt as Congress.
If Congress doesn't like me calling them corrupt, I quote my high-school coach who used to say : "If the shoe fits, wear it."
As if this damage were not enough, think about the following: Are we now a "service" economy? Weren't we a powerful "manufacturing" economy in the past? What happened to those jobs? They went overseas. Why? Why should any capitalist manufacturer pay $5.15 an hour for labor when he can pay a Third World worker $5 a day or less? Oh, wait, the minimum wage is over $7 an hour now and still rising.
Within our country a lower minimum wage will decrease the distance between the rich and the poor, and increase the buying power of the poor. On the international level, a lower minimum wage can bring some manufacturing jobs back into our country. Our poor are too uneducated or unskilled to do modern office or high-tech work, but those simple manufacturing jobs fit them perfectly; that is why the Third World countries want those jobs so much for their uneducated, unskilled people.
No matter how many American workers lose their jobs or live in poverty, your congressmen and their rich friends still have their jobs so why should they care about you, unless you vote? Every election the politicians promise you better wages, more jobs, etc. but they never mention what it is going to cost you; the cost is that you are going to be pushed deeper into poverty. So why do you keep voting for those liars, or not voting at all? When are you going to get smart? BOTH California Senators Boxer and Feinstein VOTED to RAISE the minimum wage; they are rich, their friends are rich and all will get richer. Do you think they really care about YOU?
If raising the minimum wage is such a great thing then why isn't the minimum wage $100 ?
And why is congress flooding the labor market with more than 14,000 illegal Mexicans per day,
and more than one million other foreigners each year to DEPRESS wages ?
Rich owners give money to Congressmen to run for office.
Rich owners don't want to pay their workers more money.
But the Congressman raises the minimum wage to BUY votes from unions and the ignorant.
So Congress imports millions of illegal workers for use by the rich owners
and for the sole purpose of lowering wages
and compensating for the damage done by raising the minimum wage.
Poor and middle-class Americans are being screwed by both of these actions. These actions by Congress are criminal actions against poor, stupid or ignorant Americans and are being done on purpose, not through error or stupidity.
Raising the minimum wage is like shooting-up with another dose of heroin,
and when the time comes for withdrawal it is going to make the Great Depression seem like a walk-in-the-park.
Another thought: isn't this a Capitalist economy? Mandating a minimum wage
defeats the laws of supply and demand. And isn't wages an agreement
between the employer and the employee and non of the governments business ?
Where in the Constitution does the government get the authority to impose a minimum wage ?
Actually, there shouldn't even be a minimum wage, it is none of the Federal Governments business,
the whole thing is done just to buy the votes of the rich, unions, and stupid people.
And what about the employeer / business owner ?
Do they have no rights ?
I saw a congressman in a TV show (SG-1) say: "Given the chance, half of all American
citizens won't even vote, and the half that do vote are too stupid to know
what the're doing."
How depressingly true.
But it explains the current President and Congress.
Congress, in order to BUY votes from stupid voters,
has addicted the country to inflation, driven by raising the minimum wage,
and to expansion, by bringing in aliens, both legal and illegal;
which has effects like driving housing prices from $100,000 to $500,000
for the same house. Both of these actions are similar to shooting up with
heroin, you get a great temporary high, BUT you have to keep shooting up to
not go into withdrawal. But eventually you have to stop shooting-up and
go thru withdrawal, or die. Congress is too addicted to stop shooting up,
so I am glad that I will be dead, and that I had no children to suffer the
consequences of Congress's criminally irresponsible actions.
STABILITY would have been much better, but Congressmen are inherently unable
to think past the next election, much to the damage of our country.
Just like drugs, eventually the only dose that will provide relief is a fatal dose.
Our capitalist economy is so strong that it has been able to survive massive amounts of damage by Congress, but it cannot survive infinite amounts of damage by Congress.
What if a worker or a job not is worth $5 an hour?
Raising the minimum wage excludes these jobs from the economy, or they become under-the-table/underground-economy jobs on which the government cannot collect taxes or statistics.
Your average new, inexperienced, high-school graduate (or dropout) is not worth $10 an hour, or whatever, and needs to start low and work their way up to higher paying jobs as they gain knowledge and experience, and prove their worth and ability.
Finally someone besides me said it:
May 2006 uschamber.com magazine p.4:
"The Chamber is urging policymakers to resist raising the minimum wage because it results in the loss of low-wage jobs. "Economic studies show that raising the minimum wage hurts those that it is intended to help - low skilled, entry-level workers," explains Marc Freedman, Chamber director of labor law policy."
In April 2016 Warren Buffet said it.
Wow, talk about getting verbose! How many times did I repeat myself? I need less caring, and a lot more editing time.Return to Top of this page.