Doubling the Minimum Wage: Benefit or Penalty?

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Sep 10, 2014 No Comments ›› admin

by Sid Frasier

The free enterprise system is a powerful mechanism for balancing an economy. The process of undermining the principles of that system can lead to economic turmoil.

We live in a nation that was the epitome of free enterprise, fair competition, supply/demand, innovation and the concept that anyone could succeed. Like so many of the fundamental elements that made America great, the free enterprise system is under attack. Anyone that has taken basic finance and economics understands that it is essential to control expenses in order to remain in business or maintain a family budget. The government, however, doesn’t play by the same rules that everyday Americans face.

The minimum wage is yet another way for government to get involved in an area it was never intended to dominate. It is another emotional tool that provides politicians a path to the victim mentality without the victim realizing they really won’t benefit. The single biggest beneficiary of minimum wage increases is the government as in most cases it increases the tax burden and provides government additional revenue. The minimum wage earner and the business owner both see their taxes increase, therefore this becomes a mandatory hidden tax increase.

Graphic:  The Atlantic

Graphic: The Atlantic

So what happens when the minimum wage increases? First the employer must determine how this increase will impact their ability to stay in business. Then the employer must reassess their entire salary base and determine how employees above the minimum wage will also receive an equitable salary increase. A fundamental question might be; does the overall salary paid equal or exceed the revenue received. More specifically will there be an improvement in job quality, performance, productivity or customer satisfaction (all factors that sustain businesses?) If the answer is NO, then the business owner is faced with a series of tough decisions. The results are often reduced hours, increased customer cost, elimination of other benefits and frequently downsizing. Like most of the government regulations, small to midsize businesses suffer the most as the government increases control.

You might be saying this really helps the person that has worked for years in a minimum wage job. If you think that – you are wrong! First most people that a work in minimum wage jobs don’t make it a career. Generally these folks lack skills, ambition, experience and/or desire to do anything else. In the case of a young person, it is perhaps the need to learn what having a job entails, in the case of a student it is a way to earn basic income for a short time, in the case of a mentally or physically challenged person it is a way to contribute to society, in the case of someone that seeks a career in the field it is the first step to further growth; but sadly in the case of some people it becomes their way of life.

2013 Minimum Wage by state (Graphic: Tag Pay)

2013 Minimum Wage by state (Graphic: Tag Pay)

The entire concept of minimum wage is completely wrong. Every job has tasks that relates to a skill level, trust factor and value. If you are hired to wash dishes the skill level is low, you are entrusted with a simple task and the value is perceived as anyone can do it. If you do a good job washing dishes, come to work on time and learn other skills your value increases. Businesses should have the latitude to pay salaries that are in line with the task demands. In the case where a business does not fairly compensate the employee, an enterprising person simply finds a new place to work. If people spent as much time trying to improve themselves and their value to the company as they do whining about how much they are paid… they wouldn’t be trapped in a minimum wage job. Ever wonder why so many companies are hiring contract, part time or temporary workers?

Doubling the minimum wage will do a number of things: It will increase the price of goods and services from every suppliers through to consumers. It will cause many businesses already struggling under the current economic climate to fail. It will cause business owners to increase the minimum skill, performance and task level for entry level qualification. It will place unsuspected tax burdens on companies and people at every level. It provides a disincentive for people making just over the minimum wage as they have worked to achieve what others will be given. It will increase the cost of unemployment insurance as this demographic has the highest rate of transient jobs. Sadly, many unskilled people will not be given an opportunity go to work and develop their skills through “on the job training” so they can learn and prosper in the future. The people that have no initiative to improve their life will see only a short term superficial benefit as they continue to struggle. It also allows the justifiable argument for raising prices without improvements. Thus any perceived gain is offset by the rise in cost of goods and services purchased.

The minimum wage is just one of many initiatives put in place to control people and erode the free enterprise system. The Federal Reserve has unrestricted power to print IOU notes perceived as money. The plan to establish world bank in order to further manipulate U.S. funds is being implemented. International consortia with the intent to control food, healthcare, unjustified environmental controls is being put in place slowly. Our massive national debt carries long term consequences but flies dangerously under the radar. Most people are oblivious to the impact of these issues on their individual lifestyles… and the sad truth is that many of us may be working for minimum wage long before global warming has been admitted to be a hoax.

The government has made welfare a lifestyle choice for the conically lazy, so why would they even consider the possibility of taking a minimum wage job? Doing nothing, knowing nothing and expecting entitlements is part of the same mentality that drives the minimum wage increase protestors. As a true American, you need to ask yourself… is controlling the minimum wage a benefit or a penalty?

Sid Frasier is a political activist and writer and owner of Electronic Assistance Corporation.

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