Why is Raising the Minimum Hurtful to Poor Families?

 How Can Raising the Minimum Wage Be Bad?

If you are smart enough to connect the dots, this is so very “sad” .The odd part is the sophomoric do-gooders that think it is going to help. The unintended consequences will cause “far” more pain to the poor than the benefit. Many truly think they are doing a good thing but the result is an insidious “evil act.” If you do not understand, please read up on the macro-economic consequences on raising the minimum wage. You hear about the folks that get a higher wage that they still cannot live on; but you do not hear about the thousands of people that lose their jobs as a direct result. Small business economic rules have been the same for thousands of years and you would be naive to think they will change. If someone does not bring enough value to pay for themselves, that position will be eliminated in most cases in a small business. You do not hear about the jobs that are never created. You do not hear about the people that are replaced by technology because it is cheaper or past the breakeven point to buy some software or equipment to replace unskilled labor. Now these poor families will have nothing after the unemployment runs out. This must be frightening for the parents and the kids. That is why this is sad.

How Much is too Much?

If a $15.00 minimum wage is not enough for a living wage, then what is the right number? $20.00 per hour, $50.00 hour? $100.00 per hour? Unless businesses can raise their prices to at least pay for their labor cost increases, or if they have enough profit margin to absorb the cost increases, the businesses will have to cut labor or find a way to get the tasks done without the labor. Keep in mind, when a company adds an employee or a group of employees, they also have to hire more managers, pay for more space, pay for payroll processing expenses, pay for healthcare (if they have over 50 employees), pay for infrastructure (lights, heat, toilet paper, more IT, more chairs, tools, etc. Conversely, if a company cuts back on employment, they get to reduce a portion of the afore mentioned marginal costs.

 Solution to Avoid the Minimum Wage?

Unskilled labor are usually teens, people in their first job or people who go from unskilled job to unskilled job. Until the people in this category are viewed by management as being productive enough to hurt the business if they leave for a higher paying opportunity, they will always be paid a low wage. In theory how much some gets paid is a bid situation. If you are making $10.00 and the company down the street just lost their best employee and they offer you $20.00 per hour, your existing company has a decision to make. They can counter with an offer to you to stay or let you go and try to hire and train someone to replace you. The good news for you is the hire process is actually expensive. So if you are productive, you have the upper hand. No matter how good you are and no other company or department wants your services, your wage will not go up in theory. The solution is to make yourself more marketable so the minimum wage is an issue.