Minimum Wage
I grew up very poor. There were times when we had to choose between electricity and food, of course we chose food every time. Sometimes there wasn't even enough for the choice. I've worked some very low end jobs back in the day. Most of them were normal jobs you would think that someone with no education would get or someone still in school. Jobs like fast food, dinners, grocery stores, car washes, lawn care, farm work, and even had a paper route when I was very young. Since then I've gotten a Bachelors degree and a real career. I've worked from the bottom up and everywhere in between. I tell you this so you can see I'm not just some over paid jerk trying to make life hard for people that don't make a lot of money.
I can remember back when minimum wage was $3 and some odd change per hour. Since then, where I live, it's almost $9. I have seen gas go from $1 something to about $4 per gallon on average. The price of everything has went up accordingly as well. It's gotten to the point where I started to see a trend. I then did some reasoning and thinking and came up with an idea why everything has gone up in price.
Most of the places you buy things from like gas, food, and whatever else you need is mainly stocked and staffed by minimum wage employees. When you go to a restaurant the food is cooked, the dishes are washed, and the place is cleaned by people that most likely make minimum wage. Your server is most likely making under minimum wage and relies on tips to make up for it. Please make sure you tip your server well. These men and women depend on them.
My point being when minimum wage goes up the business are forced to pay more to their employees while bringing in the same amount of money. Doing so hurts the bottom line and lets face it. That's all most business care about. They are left with a couple of choices to make up the difference.
Lets start with option one, layoffs. This puts people out of work that may draw unemployment, welfare, and can very easily cause the business to be short handed. When a business is short handed not as much work gets done, customers complain, and may have to work the employees overtime. Overtime of course negates the idea of saving the bottom line savings. Why would a business do this? I have no idea, doesn't make sense to me at all. Although, many companies see this as a quick solution. So the rounds of layoffs start.
Option two, raising prices. What's the downside to this? That is a little harder to realize. The first thing that comes to mind is competition. If another business can provide the same service or product cheaper they will lose customers. Come to think about it, that is a bonus for option one, being more competitive. Customers might complain about the prices. These types of complaints can normally be covered by saying what you paid for them has went up so you had to raise your prices to cover the cost. Might not be the whole truth but that will generally satisfy the customer. After a short time most of the customers become accustomed to the higher prices and stop complaining.
Where is the downfall for the rest of us? Well, there is the fact that we are either going to be paying for welfare for the people that were laid off or higher prices for the good and services we use everyday. The fact we are spending more money and losing our own bottom line increase the minimum wage gave us in the first pace. Losing our own bottom line makes us and the government want to raise minimum wage again. The whole cycle starts all over again. From what I have seen, there is about a two to three month delay. So when minimum wage goes up, we have more money to spend for a month or two. Then it balances back out. While we have more money in our pocket, we still can't buy more goods and services then we could in the first place.
Now that I have thought this out I'm wondering what the point of raising the minimum wage was in the first place? In the end we can't buy anything more than we could in the first place and we are back in the same spot we started. There seems to be more money circulating in the economy but it's worth less than it was before the increase happened. The only thing I can think of that would make the government want to do this is to look good on paper. It also sounds good when running for election. "I've made you get more money" Well, yes, but you've also made with worth less. I say the next time a politician wants to raise minimum wage we tell him/her to shove that idea where the sun don't shine.
Then again, I'm just some guy named rug, and that's what I think.
I can remember back when minimum wage was $3 and some odd change per hour. Since then, where I live, it's almost $9. I have seen gas go from $1 something to about $4 per gallon on average. The price of everything has went up accordingly as well. It's gotten to the point where I started to see a trend. I then did some reasoning and thinking and came up with an idea why everything has gone up in price.
Most of the places you buy things from like gas, food, and whatever else you need is mainly stocked and staffed by minimum wage employees. When you go to a restaurant the food is cooked, the dishes are washed, and the place is cleaned by people that most likely make minimum wage. Your server is most likely making under minimum wage and relies on tips to make up for it. Please make sure you tip your server well. These men and women depend on them.
My point being when minimum wage goes up the business are forced to pay more to their employees while bringing in the same amount of money. Doing so hurts the bottom line and lets face it. That's all most business care about. They are left with a couple of choices to make up the difference.
- Layoffs
- Increase prices
Lets start with option one, layoffs. This puts people out of work that may draw unemployment, welfare, and can very easily cause the business to be short handed. When a business is short handed not as much work gets done, customers complain, and may have to work the employees overtime. Overtime of course negates the idea of saving the bottom line savings. Why would a business do this? I have no idea, doesn't make sense to me at all. Although, many companies see this as a quick solution. So the rounds of layoffs start.
Option two, raising prices. What's the downside to this? That is a little harder to realize. The first thing that comes to mind is competition. If another business can provide the same service or product cheaper they will lose customers. Come to think about it, that is a bonus for option one, being more competitive. Customers might complain about the prices. These types of complaints can normally be covered by saying what you paid for them has went up so you had to raise your prices to cover the cost. Might not be the whole truth but that will generally satisfy the customer. After a short time most of the customers become accustomed to the higher prices and stop complaining.
Where is the downfall for the rest of us? Well, there is the fact that we are either going to be paying for welfare for the people that were laid off or higher prices for the good and services we use everyday. The fact we are spending more money and losing our own bottom line increase the minimum wage gave us in the first pace. Losing our own bottom line makes us and the government want to raise minimum wage again. The whole cycle starts all over again. From what I have seen, there is about a two to three month delay. So when minimum wage goes up, we have more money to spend for a month or two. Then it balances back out. While we have more money in our pocket, we still can't buy more goods and services then we could in the first place.
Now that I have thought this out I'm wondering what the point of raising the minimum wage was in the first place? In the end we can't buy anything more than we could in the first place and we are back in the same spot we started. There seems to be more money circulating in the economy but it's worth less than it was before the increase happened. The only thing I can think of that would make the government want to do this is to look good on paper. It also sounds good when running for election. "I've made you get more money" Well, yes, but you've also made with worth less. I say the next time a politician wants to raise minimum wage we tell him/her to shove that idea where the sun don't shine.
Then again, I'm just some guy named rug, and that's what I think.
Well said...
ReplyDeleteit is a vicious circle, indeed.
ReplyDeletenow the question remains... how do we fix it? any decent ideas? I am sure all out of them. but this is something to ponder. thanks.
Sadly, I don't have any ideas. Although I think the first thing to do is to stop minimum wage increases. That would at least stop the inflation causing American products to be cheaper over time. Thus producing more jobs and a stronger economy.
ReplyDeleteI have never claimed to have the answers but at least I can figure out where the problems are.
Thanks Cap
--rug