a living wage - introduction

While I am opposed to a $15 minimum wage- I would love to see everyone get a living wage.

I would agree 100% with the notion that every full time employee should be able to make enough money to rent or buy a house buy enough food to feed themselves and take care of a dependent.

However- raising the minimum wage will not allow this and the only way to make this dream a reality is for people to have higher real wages which mean low unemployment and lower prices.

The notion that raising the minimum wage will result in a higher standard of living across the board is simply magical thinking.

First- in order for a higher minimum wage to mean anything for the bottom rung prices would have to remain the same or at least increase less than the minimum wage increase.

So when these posts pop up I start talking about regulations, taxes subsidies , tort and monetary reforms which the people supporting a higher minimum wage will automatically dismiss under the claim that would only help the rich then state that executives at McD’s make $8 million a year.

The supporters of a higher minimum wage seem to believe that if you simply raise the minimum wage- the executives will simply cut their own pay and it would be enough to cover the increase with out raising prices or cutting jobs which leads me to conclude that they believe that the bulk of a burger’s price is the CEO’s pay instead of the executives pay being a small cut of the burger’s price and selling millions of burgers.

If they made their money from mark up- then it would be reasonable to believe that they could make money if they cut their prices. If they made their money in volume – there would be little room to alter pay or other costs upward. As lower prices tend to attract more customers- a company that offers lower prices might be more profitable than one with higher prices. We must also remember that industries with high profit margins- no matter what the cost of entry is will attract new competitors who will bring down prices.

Another fact to remember as well- is that when the cost of running a business goes up- companies will find ways to cut costs, raise prices or go out of business- all of which harm the poor the most.

So any answer that increases the cost of business must be rejected- and we must look for other answers.

If the fast food giants are big because they keep their prices low- decreasing the cost of business will lead to lower prices. I will go though my next few entries addressing each point starting with subsidies and taxes, then monetary reform and finally tort and regulatory reform.

I am looking at these things- as all I would expect to happen with a minimum wage increase- is for people to loose their jobs and prices to increase unless something offsets the higher wages. So let’s look things that could lower the cost of business- there is a chance that it might not increase the buying power of $7.25- however if that does not happen the trade offs could be more raises, more well paying jobs and lower unemployment making it easier for people to climb the economic ladder- which is the common goal.