Why A $15 An Hour Minimum Wage, Or Any Minimum Wage Will Not Work!!!

Federal Reserve

First of all, why be a piker?  Why not make the  minimum wage $100 per hour?  Oh, you say that’s ridiculous.  Well, 50 years ago, the minimum wage was $1.25 per hour, and people would have laughed had you suggested a $5 minimum wage let alone $15.  As has been pointed out in numerous articles in the past in this BLOG (see related posts below), the Federal Reserve is responsible for undermining the value, and therefore the purchasing power of the dollar.  A minimum wage is a very brief and nominal fix to a much more serious problem – inflation, or the increase in the money supply when the Fed’s print and digitize like crazy more dollars chasing the same amount of goods and services.  Prices going up are a result of inflation – not inflation itself.

There’s more to this issue.  If you like to go to Burger King, or Panera and have lunch, you will eat food that is prepared by a human being, and served to you by a human being, and paid for through a human being.  All these human beings get paid for their work.  4 oz. of hamburger probably costs Burger King about $0.25.  The bun costs about $0.03.  The ketchup, mustard, pickle, lettuce, onion and tomato probably costs $0.07 not including the labor to cut it up, cook it and serve it.  The wrapper costs about $0.005.  Per hamburger, the cost of water for cleaning, electricity and gas for cooking and lighting, property taxes on the building, equipment fire and liability insurance and all else probably costs about $0.25.  So, not including labor, a Burger King Whopper costs roughly $0.65, but it sells for at least $3.00.  So, is Burger King making $2.15 profit on every hamburger?  No way!

They have to pay employees an hourly wage to be there whether there are any customers or not; to be there before and after closing.  They have to pay for health insurance for the employees.  They have to pay for Workman’s Compensation.  They have to pay for liability insurance in case an employee is negligent, or a customer is looking to make a fast buck.  They have to pay F.I.C.A. which is Social Security withholdings which will go up with an increase in wages.  They have pay for the bookkeeping to withhold other taxes and then write a check to the employee.  They have to retain an attorney in order to comply with all laws and observe good labor relations.  So not including the hourly wage, the employer is paying at least $4.00 or more per hour just for the fixed expenses of having an employee.  Now, if you’ve ever been to a Burger King, you know there is a manager, sometimes an assistant manager, two to three people in the kitchen, one at the drive through window, and at least one or two at the counter to take the walk-in orders.  So, you have reasonably at all times on average 6 employees.

Let’s say the Burger King is open from 7 a.m. to 11 p.m.  That means that there are employees there from 6 a.m. to 12 p.m.  That’s 18 hours a day times 6 people which comes to 108 man hours per day.  now, let’s add $2 an hour, for the increase in the minimum wage, times 108 man hours, and we’re talking about $216 per day.  This is a conservative estimate.  Let’s divide $216 by the theoretical $2.35 profit per Whopper, and you get 92.  That means, just to break even on the new minimum wage, the Burger King must sell 92 more Whoppers per day.  Or, they can raise the price of Whoppers sufficiently to cover the wage increase.  If that comes to $1.00 per Whopper, then how many fewer Whoppers will they sell because of the price increase and the reduced affordability upon a people who are already over-taxed, over-burdened, over in debt etc.?  What if they sell 20 fewer Whoppers a day?  Then they will have to raise prices even more.  Of course, they can cut quality – not likely.  Or, they can reduce employees which will certainly reduce the speed with which a Whopper can be delivered, and quality may decline as well.

Ultimately, as the minimum wage affects all labor in the community or nation, then business activity will be reduced, jobs will be lost, profits will decline, reinvestment in the community will decline, tax revenues will decline, and the slippery slope into the abyss of a socialist morass of insanity, envy and ignorance of economics will lead to a spiraling decline into recession and/or depression.  No, a minimum wage destroys jobs, job opportunities, and a once booming economy.  And, those blessed to have a minimum wage job will find themselves in the same boat they were before, and so they will want a raise in the minimum wage to $18 an hour and so on and so on ad infinitum – so let’s just go ahead and make the minimum wage $100.  So go after the Fed’s, and forget the economy destroying socialist minimum wage.

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Pensamiento Peligroso writes the truth as he sees it, and if it upsets you, then it makes you think!

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