How dare the government – any government – set a minimum wage that a business must pay its employees? It’s the pinnacle of arrogance and exactly the strong arm tactics the founders warned us of – a runaway, all-powerful government.
The “Fight for $15” has been circulating for a few years. It seemed to have reached a peak in interest maybe about a year or two ago, but coverage and enthusiasm had fallen off.
Well, evidently, the “Fight for $15” is picking up steam again as the Democrat-controlled House of Representatives passed the Raise the Wage Act, which would make $15 an hour a reality for nearly all American workers by 2025, more than doubling the current national minimum wage of $7.25 an hour.
Now obviously this “Act” is going nowhere, and therefore one has to wonder if the vote is really just an “act” in itself. The Dems know full well this will die in the Senate – that Mitch McConnell will never even allow a vote on it, so maybe it is just a show vote.
However, there are enough fiscally moronic Dems in the House that cause me to believe this is not just a show vote. They really do want to mandate a nationwide $15 per hour minimum wage.
And when I say fiscally moronic, I mean just butt-stupid. They have no idea what a more than doubling of the minimum wage, nationally, will do to the economy. But frankly, to the party of identity politics and virtue signaling, I don’t think they’d care if they did understand the ramifications.
First and foremost, a national mandate like this is clearly unconstitutional, as are all national wage decrees. The federal government has no authority to tell private industry what it must pay its employees, yet the minimum wage has been raised 22 times since its inception in 1938, as part of The Fair Labor Standards Act. Thanks for that, Franklin Roosevelt.
If the states wish to create their own minimum wage, as they’ve all done, that’s up the them.
Second, not all economies are equal and thus wages can’t possibly be. One could purchase a sprawling estate in Mississippi for the same price as an apartment in New York City. One could do okay on $15 per hour in the rural Southeast, whereas, one could not survive on the same in San Francisco.
And third is productivity. Wages are set not only for competitive purposes, but also by what an employer can afford to pay an individual for what they produce.
Labor is a product, just like tangible goods. An employer must look at each employee as being able to produce at least as much value as the wage they will earn. Think of it in the same way that a business buys a product wholesale and sells it at retail. The difference in price is their gross profit.
As the great economist (and one of my heroes) Walter Williams says: “What the minimum wage laws do is cut off the lowest rungs of the economic ladder.”
In other words, those with the least amount of skill and experience will be locked out of the hiring process all together, because they are incapable of producing adequate value.
And one last point. We understand that due to the Trump economy, most people are no longer being paid the $7.25 minimum wage. It’s probably more like an average of $10 per hour. So a hike to $15 is not double, but a 50 percent increase. Still sounds great – right?
Now, reiterating that employee labor is a product which is purchased just like a car or a TV or a gallon of gas, think of the proposed wage increase in these terms. Think you could afford a 50 percent increase in the price of products you buy?
The average cost of a gallon of gas is about $2.65. A 50 percent increase bumps the price to $3.98/gallon. A TV may run around $500. Add 50 percent and you get $750. Average car – say $30,000. Add the minimum wage hike and it’s now $45K.
Imagine if the federal government just passed a law which increased the price of gas by 50 percent. Think the public would be cheering?
What makes these socialists think that small business employers can just absorb such a price increase when the average citizen could not?
That’s the problem. They don’t think. They just believe that if it sounds “fair” and “just,” it must be made so. There is no thought as to the feasibility of the arbitrarily chosen $15 per hour. It’s as if they think that every employer, big or small, has a pile of money locked up in the back room of their businesses that they can just tap in to. This just isn’t so.
If big cities like Seattle or San Francisco, with already relatively high wages, are seeing increases in business closures due to their own local minimum wages, imagine the effect a national $15 minimum wage will have on areas that are not nearly as affluent.