By Andrew L. Sullivan
By now, you may have read a dozen essays on minimum wage with numerous theories from people who are actually paid salaries instead of wages stating numerous facts and theories about the topic. However, nothing comes close to experiencing minimum wage and what happens when it goes up. Having a minimum wage law is one thing but changing it is just a pure act of fraud.
Raising the minimum wage is said to help workers but it does not. Yes, temporarily there is more money in the pocket but the worker still has the lowest paying job on the pay scale. Also, they are now left wondering for how long they were “under paid”. It happened to me. After two years working for a business and having received two pay raises, with minimum wage increase enacted one month before I quit, I found I was being paid 5 cents above minimum wage.
With an increase in minimum wage, the employer demands more productivity while cutting back on perks and benefits. Where 10 widgets an hour was fine, now 12 widgets are necessary to keep your job. Where 15 minutes late to work was tolerated, now it is if five minutes. This is how businesses get rid of unproductive people. The raise in the minimum wage gives them incentive to do so. And the free coffee has been replaced by a vending machine.
The real motivation for raising minimum wage is an elitist cleansing of “low brow” jobs. Notice all your clothes are made outside the USA? Notice how some people complain on July 4th that all the fireworks and American flags are made in China? Notice you pump your own gas? This is because American labor is actually too expensive and we chose not to do those sorts of jobs. We priced our labor out of such industries a long time ago and it was not just minimum wage. It is all those FICA Entitlement taxes for Social Security and Medicare creating a 15 percent gap between employer and employee.
If you doubt this job cleansing, look no further then Wikipedia which says, “… the minimum wage promulgated by the Fair Labor Standards Act of 1938 was intentionally set at a high, national level to render low-technology, low-wage factories in the South obsolete.” (http://en.wikipedia.org/wiki/Minimum_wage)
The real reason behind raising the minimum wage today is to conceal the extent the Federal Reserve has devalued the dollar. Today, the Canadian dollar is on par with the US dollar but take a look at some of your old books. Notice the Canadian and US dollar prices on it? I have a book printed in 2009. US price $15.00, but in Canadian dollars, it is $18.50. This is just one measure of how far the US has been devalued and raising the minimum wage is just a way to cover for this fact without calculating the real damage. But the Federal government does not want us to figure this out. After all, why bother buying government bonds and saving money if it is going to decrease in value anyways?
We really cannot face the facts on quantitative easing or raising the minimum wage. These are the same tricks as cutting a 12 inch ruler in half and giving it to a kid to convince them they are as twice as tall as they were yesterday. This is where people need an older brother, who explains the ugly truth about Santa Claus. At some point, the truth has to be exposed.
The Federal Reserve Act currently gives the Federal Reserve the authority to use monetary policy to combat unemployment. This means if the minimum wage is raised to $9.00 and causes unemployment, the Federal Reserve will inflate the dollar to so the $9.00 buys far less. In fact, when adjusted for inflation, $9.00 is about equal to $2.90 in 1979 dollars, which is what the minimum wage was then.
If anyone cares about the poor and working class and unemployed, the real advocates for such people have yet to show up. The Federal minimum wage law should be abolished and such powers returned to the states to compete. Secondly, change the Entitlement taxes so both employee and employer only contributes 5 percent each for a total of 10 percent. If the cap has to be raised up to as much as $250,000 to accomplish this, do it. However, if the cap is raised, so should the age requirements. The Social Security age should be 68, with 65 for early retirement. Medicare and Medicaid eligibility should be moved to the same ages. This need only apply to those under 50 right now.
If you cannot take these proposals seriously, then you cannot care about the poor, unemployed or helping the average worker.