We have all heard the Democrat Party advocate for "a living wage." This sounds good because everyone in the labor market wants "a living wage." The Democrat Party is now advocating for a $15 per hour minimum wage. Of course, everyone who is currently earning $7.25 per hour would like the increase in pay for the same amount of work.
For some strange and unexplained reason, the liberals and progressives in the Democrat Party believe that every business has a pool of funds available to fund this increase in pay. This, of course, is not the case at all. Many small businesses struggle every month to make payroll and keep the doors open. Small business owners usually hire the minimum number of employees they need because they know that one of their main costs is personnel. Each year, when they prepare their operating budget, a set amount of money is set aside to pay their employees.
On the other hand, there are some businesses and local governments who may have some extra cash in the personnel budget and can afford to hire some minimum wage workers for summer work or for work during the Christmas season. Usually, these temps are young people without much real world experience, and the job they are hired to do is "entry level work." The temp earns the minimum wage while at the same time gaining work experience. Seldom is the temporary worker supporting a family or believes that the work he/she is doing is permanent. Usually, there are no benefits offered for temporary work other than those benefits prescribed by law. So this is a win/win situation for the employer and the employee. The employer gets work done for a price that he can afford and the temporary employee earns some money while gaining valuable work experience in the competitive labor market.
Seattle, Washington, one of the most progressive cities in the world, recently raised their minimum wage to $15 per hour. Instead of helping individuals find entry level work, these progressives (Democrats) actually hurt this population. Restaurants closed and young workers lost their jobs. Small businesses had to lay off workers and here is the reason why. A temporary worker who earns the minimum wage ($7.25 per hour) earns about $290 per week or $1160 per month. This comes to just a little under $14,000 per year. If the minimum wage is raised to $15 per hour, then the employers must pay $600 per week or $28,800 per year. This is an increase in cost to the employer of $14,800 per year. The employer can raise prices on his goods or services to try and recover his cost, increase production, or he can reduce his cost of labor by laying off workers. Hello robots and self-serving check out lines. In many cases, a business must be creative to survive in a competitive environment, and a $15 per hour minimum wage hurts both the employer and the employee. Seattle, Washington, has already proved this fact.
Mark J. Perry, an economist at the University of Michigan, has written why the minimum wage is a bad idea: "Proposed minimum wages are almost always arbitrary and never based on sound economic analysis. Many unskilled workers will be unable to find work and will be denied valuable on- the- job training and the opportunity to acquire experience and skills. Minimum wage laws discriminate against unskilled workers in favor of skilled workers, and the greatest amount of discrimination takes place against minority groups."
I have never met anyone who thought they were paid what they are worth. This is true for the minimum wage earner. But the Law of Supply and Demand always rears its ugly head. If the cost of labor to an employer is too high, he will, out of necessity, figure out a way to reduce his costs - usually by laying off workers. On the other hand, if the cost of labor is determined by market forces, then the employer can afford to hire more entry level workers.
Whenever you hear a Democrat progressive or liberal say that people should be paid a "living wage", just remember that for some unexplained reason, these people want to see more people unemployed. If you expect to go through life earning the minimum wage, your goals are not high enough. The term "living wage" is political jargon designed to fool the entry level worker and get his/her vote. The progressives and liberals never tell this group that a "living wage" means higher unemployment. All one has to do is look at the math.
