Hi everybody, welcome back to Fiscal Friday, this is Bess Byers with A Generation Empowered. We’re coming from spectacular Seattle, a city a 15-dollar-an-hour minimum wage. Last week the Washington State House voted to increase the minimum wage to $12/hour. As a northwest native, I feel it’s my duty to debunk minimum wage’s major myths. Say that ten times fast! I almost sound like a politician. The road to Hell is paved with good intentions, and like most government intervention, minimum wage laws are *supposed* to help people. But this is politics. Nothing is what it seems. So today we’re quashing three minimum wage myths.
1. Minimum wage laws don’t affect employment. When you put a minimum price on a wage, you deprive people who might earn less, the right to work. Students and low-skilled workers, this impacts you! Politicians essentially say you’re better off unemployed if you can’t earn minimum wage. A University of Vermont study found a 10 percent wage increase led to a 1 percent reduction in employment and the CBO estimates a $3 wage increase would reduce employment by 500,000 workers. Unemployment caused by minimum wage laws now means you’ve not only robbed someone the self-respect of earning a wage, you’ve also slapped taxpayers with the cost to support this person.
2. CEO’s will receive smaller incomes to pay employees more. File this under “50 shades of no.” Minimum wage shifts the burden of cost on to consumers. A higher cost of goods means consumers may look for a cheaper import, or if a cheaper import is not possible, consumers will buy less. According to a Bureau of Labor Statistics study, the 1996 minimum wage hike raised retail commodities like groceries and personal items 10% and food purchased outside the home 21 percent. Basically minimum wage laws are just another name for inflation. See last week’s video…
3. Minimum wage laws benefit low-income and low-skilled workers. Oh really? Northwest Asian Weekly found one Seattle cleaning lady reported since the $15/hr wage increase, she lost her 401(k), employer health insurance, free parking and on-the-job meals. North Carolina State University economist Walter Wessels determined a New York wage increase caused retailers to increase work demands, since there were fewer workers and fewer hours to do the same amount of work as before. If businesses are required to pay a higher wage, they will look for more qualified applicants as opposed to giving low-skilled applicants the skills they need to succeed.
With the minimum wage mumbo jumbo, It’s no surprise there’s a rise in robots. Look at the automated grocery checkouts and iPad ordering at restaurants. The Boston Consulting Group estimates automation in the workplace could cut labor costs by 22 percent in the U.S. Yo robots, those are jobs!
I whole heartedly agree in raising wages, however forcing them through government intervention is the wrong way. Increase wages through an increase in capital, increase machines which aid the workers, improve management on the part of employers, increase education and training. The more a worker produces, the more he or she increases the wealth of the business and in turn, themselves.
If minimum wage is so vital to prosperity, why has it been raised 22 times since its institution in 1938? If minimum wage did what it’s supposed to do, there would be no reason to adjust it, right? Just a little food for thought.
This is Bess Byers, signing out from the Emerald City, and remember, it’s your generation and you’re empowered!