Monday, March 30, 2015

One of the things that I see a lot of is that people think that

 raising the minimum wage is going to be the big be-all and end all solution to cure all social ills and eliminate the common cold.

I am no great economist and have a basic high school education but I can figure that one out.

The first thing that is likely to happen is the number of minimum wage jobs will simply drop. People will be replaced by automation. Anyone that has ordered a sandwich in a convenience store deli can see that. 

The person that used to say, "May I help you?" has been replaced with an ordering touch screen. Every touch screen means a lost job.

So the lower end jobs get replaced with automation.

Some of the businesses that depend on minimum wage labor will be forced to close. More jobs lost.

The next step, of course, is inflation. The price of goods and services will go up accordingly. It will still mean that to buy something that takes X many hours at minimum wage will still take X many hours to buy. Or at least until you figure that the new minimum wage earner is in a higher tax bracket. Now that something costs X plus hours to pay for.

In short the guy at the bottom will find himself no better off, and after a while worse off than if they had just left things alone.

The next step is that it is a lot of mildly successful people will find that they are an awful lot closer to minimum wage than they used to be. They are not going to get raises comsumerate to the change created by raising the minumum wage at all. If the minimum wage goes up, for example, 40% then you can bet their wage isn't going up 40%. They have now been dragged down closer to poverty in terms of purchasing power.

From a practical standpoint they have just gotten a pay cut.

A lot of people griped about Reagan's 'Trickle Down Economics' but in truth it created jobs. 

Right now raising the minimum wage is likely only to create Trickle Up Poverty.

To find out why the blog is pink just cut and paste this: NO ANIMALS WERE HARMED IN THE WRITING OF TODAY'S ESSAY

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