Raising the minimum wage is wrong for this fragile economy
The problem with raising the minimum wage is really the unintended consequences of same. Very similar to the unintended consequences of the ACA which has cost us jobs and diminished our healthcare which we receive. Consequences which I have both personally experienced in closing our business last year and seeing the level of service from the physicians who I see deteriorate.
The first problem with raising the minimum wage is that it is inflationary. If I, as a business owner, must pay you more, then my employees who earn more (due to higher skills, longevity, etc.) also want a raise. So I have several choices. Pay more, either fire some or hirer fewer people (which hurts the economy), cut overall hours per person (which the ACA propagated), or take less money myself. Or charge more for my product or service (if possible) and take the chance that my competition won’t increase their prices and take business from me, thereby making me involuntarily cut employees or ultimately go out of business (again, which are both bad for the economy). Or if the businesses pay everyone more and then raise their respective prices because their costs have increased, then inflation occurs, everyone pays more for everything, and no one wins (except the government who gets more taxes from increased wages).
If the minimum wage was supposed to be a living wage then why isn’t it about $25.00 an hour? That’s about $50,000 a year and about enough to pay for all the necessary items like food and lodging as well as luxuries (yes, luxuries) like cars, cable TV, restaurants, sporting events, movies, and concerts, or whatever you desire. The minimum wage is designed to give someone enough motivation to enter the workforce and create the desire to better oneself through experience, education, military or volunteer service, thereby making that individual more valuable to an employer (and him or herself) and affording the individual the opportunity to earn more and increase their standard of living.
Raising the minimum wage is like giving someone an aspirin after they were run over by a freight train. It doesn’t address the underlying cause of this weak economy.
How does a society create wealth? There is only one way. Take raw material, add labor and energy, make a product and sell it at a profit. Only two endeavors accomplish this, manufacturing and farming. That is what America did when it went through the Industrial Revolution. At its economic height, 36% of the domestic economy was manufacturing. Today it’s 11% and dropping. There is pending federal legislation that further diminish the smaller farms and that will be a further tragedy because it will propagate even further use of GMO’s by the large corporate farms.
So if you are not making something or growing something, you are overhead. And to expect the makers of societal wealth to continue paying for increased overhead without benefit is probably expecting too much. And while it’s certainly a feel good, political move to raise the minimum wage, it will definitely be inflationary and ultimately cost jobs. And that was one of the first tenants exposed by the Business School at UMass Amherst when I attended almost 50 years ago.
And those members of the legislature like Representative Boldyga who actually take the time to understand this dynamic and have the courage to vote their conscience should be commended in their actions, not denigrated by politically motivated individuals who prey on people’s emotions.
Bob Horacek
Southwick, MA
