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CNN contributor Kevin Madden, a former advisor and spokesperson for Mitt Romney (R), said on Sunday that Congress should not raise the minimum wage because it would deny people the “opportunity to grab that bottom rung of the economic ladder.”
During a panel segment on CNN’s State of the Union, host Candy Crowley observed that there was a “seriousness” to the recent protests at companies like Walmart and President Barack Obama’s call to raise the minimum wage.
Nonsense. The bottom rung of the economic ladder is already pretty low. People who are hired can have few/no skills and simply need to show up on time and be presentable to keep the job.
The only thing that eliminating min wage will do is destroy any opportunity for entry level people, preventing them from ever supporting themselves. As a business owner, why should I pay anybody $8 when I can get away with $3? People aren't going to hire 2x the workers, they will simply pay existing ones less. What a stupid idea.
These jobs are typically very low skilled and were meant for people seeking temporary income. The problem is more and more people are turning to this on a permanent basis, sometimes to support families over the long term. If they stay on these jobs for a long time, there will be less opportunity for others who really need them to enter the workforce or support temporary but urgent needs.
The minimum wage will never need to be increased; wages will continue to rise without increasing the minimum wage. It is to bring owls to Athens. Can those politians find something better to do?
Rising the minimum wage is like a dog chasing its tail. Everytime they increase the minimum wage, everything will get more expensive.
Last edited by TheBookofLife; 12-02-2013 at 09:27 AM..
Minimum wage raise will only make things worse. You're just giving employers another stupid excuse to not hire someone. I'm already struggling to get a job at MC'D's as it is.
The minimum wage will never need to be increased; wages will continue to rise without increasing the minimum wage.
Except for those at the top, wages can't continue to increase because they have not been increasing for many years now. Just possibly this is because the minimum wage hasn't been increased at anything like the rate of inflation.
Beautiful charts.
Is it increasing or not? Cap the top, elevate the bottom, close the gap? Egalitarianism is good. Give me something to motivate me please.
Last edited by TheBookofLife; 12-02-2013 at 10:40 AM..
I am not familiar with this ex Romney advisor, but he is exactly right. Just imagine an extreme case of say, $100/hr minimum wage. McDonald's would be losing money if they had to pay that, so they would either have to close their doors, or automate. So obviously in this case the minimum wage directly causes unemployment.
At a lower level, say $15/hr, the effect is still there; it's just reduced. Now McDonalds might marginally increase automation in order to reduce the number of staff needed. And they might hire and keep only the fasted, most productive, most reliable employees. The teenagers who call in sick at the drop of a hat, or the older person who is physically no longer as fast, will find it much harder to get a job. So the effect is still there, it's just not as blatantly obvious.
So the effect is still there, it's just not as blatantly obvious.
Leaving absurd digressions like a minimum wage that would be above the average wage paid right now, the effect isn't so obvious. In terms of real dollars, the minimum wage right now is low and it was much higher during periods when unemployment was lower. Because it turns out that if you pay people actual wages sufficient to live on, they have money to spent on things and the whole economy can grow.
Leaving absurd digressions like a minimum wage that would be above the average wage paid right now, the effect isn't so obvious. In terms of real dollars, the minimum wage right now is low and it was much higher during periods when unemployment was lower. Because it turns out that if you pay people actual wages sufficient to live on, they have money to spent on things and the whole economy can grow.
That's all well and good in theory, but let's put it to practical use shall we?
Right now I have a girl who does data entry and receptionist/ assistant work for me, I pay her $12 hour, which is about $1 an hour more than her previous receptionist position (so competitive in my area), which is $4.22 more than minimum wage in Colorado right now.
Come january I will have to hire at least 1 person to help take care of her job, but I really need 2 with 1 being temporary through April. Starting off I am planning on starting them both at $11 an hour, or $3.22 over minimum wage.
If the minimum wage is raised to even $10 an hour than that means pay a competitive wage, I will have to give pay my current receptionist at least $16.22 an hour as other companies will raise their pay to attract the people they need, effectively raising my costs for her $4.22 an hour just on wages, without the additional overtime costs (during tax season 50 hours is pretty easy to hit), Unemployment insurance costs, workers comp costs, and the higher FICA taxes. Just hourly my costs for that 1 employee goes up 35%.
Now for the additional help I will also have to pay them more, making my costs go from $11 an hour, to $14.22 an hour. Or 30% for each additional employee I bring in.
The problem you create is that a raise in minimum wage drives up the wage of all employees, the thing is the 2 CPAs I have working for me are going to want a raise as well. You see the receptionist gets a 35% raise without additional responsibilities, and they are going to want a raise as well, even if I convince them to only take a 15% raise, my costs just jumped up again.
So effectively my costs just in salaries goes from what i project as $155,000 next year, up to $205,000 next year. This year my profit is going to be right around $65,000, meaning I would net out about $10,000 this year with your minimum raise hike that sure I project a growth in clients and therefor revenue, but how can I achieve the growth if I can no longer afford to pay anybody? Now my prices have only risen about 3% in the last 3 years (competitive market), my costs have risen every year, and now you are adding to it.
So that means I will definitely not hire that 3rd person leaving another person without a job, in fact I would lean on not hiring the 2nd person either, as I have bills I have to pay and projecting growth is nice, but why take the risk? Also there is a couple of companies that can do bookkeeping overseas for about 10% of the cost as me actually paying someone (less control over the process and who is touching the data but what can I do?), the accountants already do the interview and audit the bookkeeping so I could easily move my data entry over to India, meaning I can actually lay off the full time employee I already have, and just hire a little old lady who is retired and wants to work a few hours a day during tax season to be a receptionist. So your little raise in minimum wage just cost the economy 2 full time jobs, and while the short term yearly job still exists, I have no need or interest in actually training them and developing them into a full time skilled employee for me or any other company.
You see my example is the difference, many businesses like mine have had their costs increase considerably, but the consumer price on products have stayed stagnant in many cases. In accounting I have to deal with computer programs that make accounting and tax preparation much easier limited my need for employees, but also allowing more people the chance to take care of their own stuff. I also have to deal with competitors that off shore much of their data entry to places like India and never tell their clients allowing them to keep better control of their costs, and then those companies and individuals who choose to use overseas services. 20 years ago you did not have that, people either had to do everything themselves by hand or pay someone to do it. If the costs of having to pay employees rose on me, then they did on my competitors as well, allowing us to raise price while staying competitive. Now my prices rise, I will be forced to do what my competitors chose to do to cut my costs, or lose my clients and close my business.
so you are welcome to argue history from 50 years ago, or you can argue reality, many of those jobs that are paid between $8-12 an hour are low skill, and can either be replaced by machines, combined into other jobs, or sent overseas. But I am sure that will have no affect on the economy.
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