Why People Don’t Understand the Minimum Wage

Minimum-Wage_0A while back now, at least when this finally posts, we did a bit on the minimum wage on the podcast and I pointed out, as I’ve had to do constantly, that most people just don’t understand the kind of financial impact this kind of thing would have. It wouldn’t just affect the relative few currently on minimum wage, it would have far-reaching effects that could have serious repercussions on the overall economy.

So anyhow, as I was in the middle of a discussion on the subject elsewhere, someone popped up and dropped this in my lap and even though I did a limited response there, I have no upper limits to my post sizes here and wanted to do it more justice.  I don’t disagree with some of what was said, although I strongly disagree with the conclusion, it just doesn’t give the kind of detail that I’d like.

The correct answer is that it would help some workers differently, and most not at all, at least not directly.
Most people make more than $16 per hour and will not be greatly affected.


While it is true that only 4.3% of paid hourly workers make minimum wage or less, that isn’t the only people who will be affected by this.  You have to look at all the people who make less than $15 an hour and as it turns out, 42% of Americans fit into that category.  As I’ve said in the past, you can’t pretend that only fast food workers are going to get the bump up, those working other minimum wage jobs will take it to court and the courts will find that, in the interest of equality, that has to apply to all.  But it gets much worse, as we shall see in a minute.

A person making $8.00 per hour would be affected much more than a person making $14.00.
A person making $16.00 per hour would find it easy justifying why they deserve a raise when entry level employees now make only $1.00 less.

None of this is actually true.  A person making $8 will get a significant bump and will probably be thrilled, but the person making $14 an hour, while they get a raise, they’re not going to be happy about it because they’ve earned more than minimum wage and are going to want to keep that advantage.  In fact, they deserve it because in most cases, they have more responsibility than a minimum wage worker and in order to keep that responsibility, they need to make more than a minimum wage worker. So they’re going to want a bump to $21 an hour.  So too are all the people already making $15, who are now going to want more because they’ve earned it and have more responsibilities.  So they’re going to want $22 an hour and so on.  This is going to ripple up the chain because people see their rate of pay as a signifier of their importance within the company.  This was proven recently in a company that guaranteed all employees an increase to a $70k salary and immediately, employees were grumbling because some of them had more responsibilities than others and they were all getting the same wage.  So this kind of massive increase is not going to affect only 4.3% of the population, not just 42% of the population, but a huge majority of the population and money, whether liberals like it or not, doesn’t grow on trees.

It would help all workers and all citizens in the sense that there would be less people to support. This would branch out in lots of ways. Less Government assistance, less 30 year old basement children, less 3, 4, and 5 generations living under 1 roof… etc.

No it wouldn’t, for the reason that you’ll get into in a moment.  However, even without that, I don’t think it will change anything. The 30-year old basement children are there because they have been taught, from birth, that the world owes them a living, whether they deserve it or not.  They aren’t there because they can’t find work, they’re there because they don’t want to work, they don’t want to have to get up early in the morning and spend the day toiling.  They want freebies and plenty of time to screw around playing video games.  Increasing the minimum wage won’t change that.  The same is also true of the perpetually poor, the people who don’t want to go to school, don’t want to learn anything, want to do irresponsible things that cost them the ability to get a job, any job, at all.  These people are just lazy, that’s why they have multiple generations living in the same shack, because they don’t want to get off their asses and work hard to achieve success.

But it would also cause inflation of pretty much everything.

And the point that I keep making and the left doesn’t want to address.  Money doesn’t grow on trees and if we pay people more, that money has to come from somewhere.  The idea that companies are going to just tighten their belts and cough up more green is idiotic.  They are  going to raise their prices, not only because their own wages go up, but because all of their raw material costs will be more because their suppliers have also gotten hit with increased wages and have to raise their prices to compensate.  In very short order, whatever economic advantage these minimum wage workers might have gotten will be swallowed up by inflation and they’ll be right back where they started off.

However, the inflation would be spread over all classes and felt more by those who buy more, whereas the wage increase would target the help to those that buy less.
The net result would be a positive for the less fortunate.

I don’t think so because the “less fortunate” are not known for their fiscal responsibility, they don’t live within their means, they spend money like a drunken sailor and will continue to do so.  That’s one of the major reasons they are in the situation they are in.  Those people who live within their means today aren’t having problems.  Of course, those people are probably more responsible overall and aren’t languishing in a minimum wage job to begin with.

The relationship with minimum raise increases and inflation is nothing more than wealth redistribution.

That is true, but wealth redistribution is no more than government-advocated theft anyhow.

Those claiming that due to inflation, the increase will not help the poor… are either being intellectually dishonest or are simply morons.

In the long term, it won’t.  The only way to help the poor is for the poor to realize that their lifestyle is unsustainable and for them to change their outlook.  That means getting an education when they have the opportunity, it means not making poor life choices, like getting involved with drugs and gangs, like not committing crimes and going to prison, and doing things that you are not financially ready for, like having a family.  It means getting a job, working hard and moving up the ladder.  That is the only way out of poverty.  Stop feeling sorry for yourself, stop thinking the world owes you anything, and get out there and earn it yourself.

It is a way to progressively take a little bit from all of us, and give a little bit more to the less fortunate.

Certainly not  because they “less fortunate” have already proven they are incapable of handling it responsibly, that’s why they are poor to begin with.  I really get tired of the left pretending that the poor have no hand in their own failures.  They do. They always have and they always will.  There is no magic bullet that will solve poverty and just handing out free money to people who have already demonstrated their inability to handle money responsibly is about the worst idea you can have.

The one thing it will not do is cause full employment. That is just silly.

Indeed it is, there are lots of people who have no interest in working at all and we allow them to get away with it.  It isn’t that I’m not sympathetic toward the plight of people who have gotten into trouble, through no fault of their own, and need a helping hand up.  It’s that I have no sympathy toward people who do it to themselves and never want to get off their fat, lazy asses again.  Yes, we should tie the minimum wage to inflation, but just raising it arbitrarily because a bunch of leftists have are in an emotional tizzy is ridiculous.  It doesn’t help anyone, inflation will overcome any advances for the poor and it harms people who actually make decent money because now, things are more expensive across the board and we don’t get an automatic raise.

It’s just more hyper-emotional liberal stupidity.  Anyone surprised?

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