The Minimum Wage Hoax

unitedliberty.org

unitedliberty.org

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  And the free coffee has been replaced by a vending machine.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.

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11 comments

  1. Mike Meister says:

    Raising the minimum wage simply means that no one is working to live below the poverty level. Currenlty a minimum wage employee makes enough money to be $5,534 below the poverty threshold for a family of four.

    Mixing Social Security and Medicare into a minimum wage argument is akin to equating an apple to an orange.

  2. Sceotie says:

    Andrew Sullivan or “Sully” is bat %$^# crazy!

  3. dan brandt says:

    Sometimes it amazes me that people are not able to really see the consequences of their actions. My wife and I own a daycare. By law we need a certain amount of adults in ratio to the kids. It starts as 1 to 4 and goes as high as 1 to 12. any of you want try and manage 6, 2 year olds, changing poopy diapers and all? But I digress. We have owned the business going on our fourth year. Only last year was the business able to pay my wife a wage. All of $1000.00 a month now $1500.00 a month. Well below the poverty level. I received nothing until I started filling an employe’s slot last Nov. How much do I pay myself? Minimum wage. Can’t afford any more. I do have a pension or we would have closed the business a long time ago. So if I pay my employees a $9.00 minimum wage, where does that money come from? From the parents of the children we watch. Whether they can afford it or not, whether they are poverty level or not, I will have to raise prices. Or I could just kick out the kids I let stay for free since their families are on hard times. By trying to help one part of society, you always hurt another and in this case, the ones you hurt the most are the ones you believe you are helping. Even if their pay goes up to $9.00, I’ll guarantee they are not breaking even but falling even farther behind. For those of you who support the minimum wage, remember the vast majority of business’ are not rich corporations but struggling small business’. You want me to give them a pay raise, cut my taxes because then I know that those who need it are getting it. No fraud, no government overhead, no one getting it who doesn’t deserve it, no waste. Government is not the answer,they are problem, sucking money from private individuals who can spend it more efficiently and cost effectively where it is really needed, rather than any wasteful government agency. Believe me I know, I was a Fed. for 25+ years.

  4. Mike, your comment, “Raising the minimum wage simply means that no one is working to live below the poverty level.”

    This presupposes one is actually working. If you get laid off and are unemployed, then your statement is still true. Clever.

    Do you actually believe there are no negative consequences of a minimum wage, in the form of increased unemployment?

    A simple “yes” or “no” will do. You either don’t believe unemployment is an effect, or you don’t care. Which is it?

  5. Andrew L Sullivan (author) says:

    To Mike Meister, the problem with the poverty threshold is it is largely subjective and if equated in dollars, it will become a meaningless measure as the Federal Reserve inflates the dollar. The FICA taxes are not irrelevant if you are trying to help the poor. In 1979 the total FICA tax was 8.1 percent, but today the total is 15.3 percent. When I mentioned the relation of $2.90 to $9.00, the biggest different is the first number is taxed about as half as much as the second dollar amount which is the proposed minimum wage.

  6. Mike Weaver says:

    I have no idea what the Minimum wage is, Last I heard it was around $7 per hour. I recently saw an article about a Walmart in North Dakota advertising for Employee’s at $17 per hour. This is the case due to the huge oil boon all along the Canadian border.Now as A true conservative I also see the drawbacks to increasing the minimum wage for small businesses like MR. & MRS Brandts, but if Walmart can sustain $17 per hour there, why couldn’t they do it here or every store? I’ll tell ya, they could, but the Shareholders would have heads rolling. Try and compare what our Dollar bought us in the 50′s and 60′s. A man could work a normal postal job and afford to buy a decent home, a decent car, send his kid’s off to a decent college. I cannot believe I am saying this, but good old fashioned wall street GREED is the real problem, in my humble unedumacated opinion.

  7. So Mike, do you believe increasing the minimum wage hurts employment or not?

  8. I meant Mike Meister, of course.

  9. Mike Weaver says:

    I personally don’t believe in ” Minimum “ANYTHING! But when our own Government has made it more profitable for these fortune 500 companies to manufacture outside the US, I guess SOMETHING needs to be done! If I knew all the answers, I would run for GOD!

  10. Joe Miller says:

    Twenty-eight states raised their minimum wage between 2003 and 2007, in an attempt to reduce poverty rates. Yet research from economists at Cornell and American University found no associated reduction in poverty.

    Empirical research has found no link between a higher minimum wage and economic growth. In fact, a higher minimum wage reduces output in certain industries with a higher concentration of less-skilled employees.

    You also price entry-level jobs out of the market and business owners expect more experienced people and more work for a higher wage.

  11. Meister— I can only hear crickets chirping. You got shy on us.

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