Why Doesn’t A Minimum Wage Work?

Ludlow massacre - working families

Laboring Families Right Before The Strike & Ludlow Massacre

If a minimum wage worked, then shouldn’t just one minimum wage last forever?  With inflation caused by the Federal Reserve and central banks around the world, people’s  minimum wage continually loses purchasing power requiring higher “minimums”.  Realistically, why not have $100 an hour minimum wage?  Then even the poorest people could get rich – right?  And, you can ask any business person what happens when costs go up – costs get cut.

What is the highest cost, with rare exception, that any business has?  The answer to that is labor.  You have to pay the hourly wage, workmen’s compensation insurance, health insurance, unemployment benefits, sick pay, paid leave or vacation, and other work environment safety measures such as OSHA and EPA.  So, what’s the logical thing to do for a business owner – cut personnel and get more out of the remaining personnel, or as we are seeing now, with sky high labor costs, it is more cost effective to go to robots which don’t get sick, arrive late, miss work, take vacations etc.

So, will a $100 an hour minimum wage make everyone rich; well, maybe not.  If I’m a highly skilled plumber, or electrician with 20 years of experience and expertise, and the minimum wage is $100 for someone who is 16 years old and has no skills, then I’m either going quit to go flip burgers for $100 an hour, or what is more likely, I’m going to strike for higher wages, and because I’m so much more highly trained and experienced than the 16 year old, I’m going to ask for a raise to $125 an hour, and I’ll get it.  And, every other skilled worker will get it as well.

So, the 16 year old flipping burgers will cost the owner of the restaurant a whole lot more in labor, so the price of a burger will go up to $15 and fries up to $5 and a soda for $3.  Now, you as a family man/woman with a white collar position and family responsibilities will look at the cost of taking your spouse and two children out to McDonald’s for an evening meal that costs $98 + tax (4 burgers, 4 fries and 4 sodas) will say to yourselves that you need a raise, and you will get one.

Pretty soon everyone’s gotten a raise; prices will have gone through the roof, and everything will be back to where it was, and the poor working classes will need another raise in the minimum wage, and so the vicious bank inspired cycle of corruption of our currency continues.  No minimum wage will ever work for anybody but government demagogues, bankers and other hucksters working behind the scenes to corrupt everything they touch.

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