This morning, I woke up to an instant message from a long-time friend that admittedly enjoys "picking my brain" from time to time on various issues be they political, social, or spiritual. Many people that know me know that I am always happy to provide my objective point of view while never holding grudges over disagreements, no matter how strongly I feel about an issue. I like to think that these traits, as well as my habit to err on the side of liberty, are why many people tend to come to me with questions like this one.
I knew my friend was looking for a detailed response this morning and I did not want to disappoint. After providing it, I thought the response would make a good post for this page. So, now that I'm done rambling, here is the question and response:
Friend:
Can I please ask your thoughts on min wage? If we raised it to an "affordable" wage for all Americans, would that cripple us? Just love your insight and my friends and I have been talking about this a lot
My Response:
I don't think it will exactly cripple our economy. I do not think it will be effective, though. At first, it will make it more difficult for unskilled workers to find a job and a large number of people will be laid off. This has more to do with return of investment in the employee than anything else. Even if an employer doesn't want to lay an employee off, realistically, that employee probably doesn't produce enough value to allow for it.
That's not to say the employee is lazy, but a person can only empty so many trash bins an hour. A "livable wage" is an arbitrary number compared to that. I know it sounds harsh, but that's just how it is.
The only way an employer can accommodate this is to increase their profits. That either means the employee produces more in a more efficient manner, or they raise their prices and force the cost to the consumer. The latter is most likely. Rising prices would eventually lead to another minimum wage increase and we would start this cycle all over again.
Here's a video that explains what I'm saying with more detail.
What's really disturbing about this argument is that the increase seems to be pushed by labor unions. These labor unions are working with politicians to be granted exemption from the laws. That means that if an employer needs to hire an employee for less than minimum wage, they can do so by hiring them through a labor union. This increases profits for the labor union because it removes the option for employees to join. The only available jobs would be through the union and the employee would still have to settle for less than minimum wage.
Outrage after big labor crafts law paying their members less than non-union workers
The real issue nowadays is that our money is worth less. The Federal Reserve prints more and more money causing our dollar to devalue. This is only possible because we use what is called a "fiat currency." That means our currency is only worth something because we believe it is worth something. There is nothing to back up the value of the dollar. This is even more devastating to retired people that have spent their life saving money that is worth less and less every day.
Another thing is the availability of jobs in our country. Companies have to manufacture outside of the U.S. in order to meet production requirements while maintaining the low prices we, as consumers, are willing to pay. If we made it cheaper for them to manufacture here, I whole-heartedly believe they would gladly move jobs back inside our borders.