The Minimum Wage is back. Democrats have been pushing to increase it as long as I've been alive. Now Obama's telling us we can solve poverty simply by pushing it up to 9 bucks an hour. Isn't that amazing!? All this time the only reason people were poor is because the minimum wage was too low? So why don't we raise it immediately? Instead of 9 bucks an hour, why not 20? Or 40 even? Why, if everybody made over 40 bucks an hour, there would be no poor.
What further evidence do we need that the Democrat constituency is ignorant, gullible, and just plain stupid? Is it even necessary to point out the disastrous consequences of jacking up the minimum wage in these ecomonically horrible conditions? It shouldn't be necessary, but sadly it is.
OK, let's say the law passes. Minimum wage is 9 bucks.
You own a small business. You've been hiring college kids in the summer to do various menial tasks. Not because they're critical to your operations, but because you have kids yourself, and feel like they need the opportunity to earn some money over the summer to help them cover some expenses in the next school year. At $7.25 it's a pinch over the old minimums in the $5 range, but you figure it's worth it to help the kids and their families out.
But $9 is another matter. At 9 bucks, you have to seriously rethink your policy on summer help, because it takes your expenses too high and threatens profits. So you'll have to cut back on the student program or maybe cut it out entirely.
Think about all the municipalities and counties who hire dozens of students every summer at minimum wage. The kids are summer camp counselors, lifeguards, umpires, city parks gardeners, library aides, and fill many other roles for the town. The city budget for summer student workers has just gone up 24 percent overnight. If you're the mayor, county commissioner, or someone holding an office with responsibility for these programs, you're stuck with few solutions. You've either got to cut back on your summer student workforce by about 24 percent, cut hours for students to 32 or 35 hours per week from 40, or get tax increases passed to fund the mandated increases.
Just about everybody can understand what it will do to the fast food business. Pretty much everybody in your local McDonalds or Wendy's or Burger King makes minimum wage or not much more. Suddenly your store's payroll costs jump 24 percent. Because it isn't just the people making minimum wage that have to get a raise, but virtually everyone else has to get a proportionate raise as well. So the Assistant Manager who was making about 9 bucks an hour is now going to be satisfied making the same as the minimum wage people she supervises? No way. So she's got to get bumped to 11 or 12 bucks. And so on up the ladder.
How does the restaurant absorb the additional cost? They can't absorb it, because their margins are already paper-thin. So everything on the menu gets more expensive. The $6 combo meal now has to cost $8. In this bad economy, folks who could manage to take the kids to McDonalds for lunch on the weekend could find $6 for each one to have a Happy Meal. But now that it's $8, it could become just enough of a price hike to cause Mom and Dad to decide to stay home and make a pot of Mac & Cheese for the kids.
So it sounds like good news - everybody gets a raise! But it's not such good news, because the price of pretty much everything is going up to eat every penny of your newfound raise. But then if you got the raise in the first place, you're one of the lucky ones. Because depending on the size of your community, hundreds to thousands of your neighbors just lost their jobs. And not just the minimum wage teens, but people in jobs across the spectrum.
Because the unavoidable fact of economic life is that when costs go up for business, business is forced to economize. And the first place businesses economize is their workforce. The owners and managers of your employer and all of your neighbors' employers will scrutinize their workforce in every department and every position, looking for which employees they think they could live without.
So if you're excited about Obama's utopian plan to get everybody a living wage, just hope you're a productive and irreplaceable employee. Because what good is a government-mandated pay raise if you end up losing your job because of it?
They say there's no way that proposal will see the light of day in congress. But what if Obama simply imposes it by dictatorial edict through his Labor Department? He's discovered that he can pass all kinds of laws without any help from congress, and all that happens is a lawsuit that takes years to make its way through the courts. By then he will have a Supreme Court majority in place that will uphold everything he tells them to uphold, so in effect the transition from a Republic to a Dictatorship will be complete.
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