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http://blog.heritage.org/2013/12/14/raising-minimum-wage-hurt-people-supposed-help/?utm_source=facebook&utm_medium=social

Raising the Minimum Wage Would Hurt the People It's Supposed to Help
Ed FeulnerDecember 14, 2013 at 10:17 am

Hike the minimum wage. For politicians trying to show their concern for those on the lower rungs of the economic ladder, it’s a simple solution.

It’s catching on again, with several states and municipalities approving local hikes, and a proposal before Congress to hike it by an unprecedented amount, from $7.25 to $10.10 per hour over the next two years.

Unfortunately, this seemingly obvious remedy is also a very bad idea, not only for the economy as a whole, but for the low-wage workers it is supposed to help.

Indeed, studies show that the latest congressional hike would likely eliminate some 300,000 jobs per year and lower our national economic output by more than $40 billion annually. Why? Because raising the cost of labor naturally makes it more expensive to hire, leading cash-strapped employers with no choice but to slow down or freeze hiring.

Those who blithely propose large minimum-wage increases are ignoring a basic economic truth: When you raise the cost of something, you slow down the rate at which people purchase it. They buy less. So an employer who might decide to hire another worker when the cost is relatively low will forgo that expense when it gets too high.

That, in turn, can be bad news for those who already work for that employer. He may have no choice but to work his other employees harder, when he could have taken a chance on an unskilled worker and given that individual a chance to prove himself and to move up.

That, incidentally, is the great truth that all too many people on both sides overlook: Relatively few people actually earn the minimum wage. Less than 3 percent of all workers earn $7.25 an hour. For the vast majority of low-skilled or unskilled workers, that amount is simply a starting salary that gets them in the door and gives them a chance to advance.

Most workers do just that. They move up. After being hired for the minimum wage, they learn valuable skills that help them move up the economic ladder. Two-thirds of them get a raise within a year.

Many of today’s entrepreneurs and success stories began their careers in very humble employment circumstances. “Actress Patricia Richardson, star of the ABC sitcom ‘Home Improvement,’ scrubbed bathroom floors and toilets in a hotel,” notes Policy Review. “Telecommunications executive John J. Sie worked on the assembly line of a stapler factory. Ivan Seidenberg, the chairman and CEO of NYNEX, was a janitor.”

Not everyone rises to the top, of course, but entry-level jobs such as these — the same kind that will be in shorter supply if the minimum wage is hiked precipitously — have helped millions of Americans (most of whom are between the ages of 16 and 24 and work part time) learn the basic skills needed to succeed in any field: Show up on time. Look neat. Be courteous. Most of all, work hard.

Wendy’s founder Dave Thomas is among those who learned those lessons firsthand. He started off working in a diner owned by two Greek immigrant brothers. “They taught me the importance of being polite and of praising people for a job well done,” Thomas said. “From them I learned that if you work hard and apply yourself, you succeed. It’s really not that complicated.”

However, if the politicians who want to jack up the minimum wage get their way, things are about to become a whole lot more complicated, both for workers and the economy.

Worse, says Heritage labor expert James Sherk, the minimum wage has already been hiked to more than $10 an hour, at least in effect. Why? Because of Obamacare’s mandate that employers provide “qualifying” health coverage or be penalized. Once the mandate kicks in in 2015, hiring costs will go up still more for employers.

Low-paying jobs have given millions of Americans with no work skills the opportunity to step on the ladder of success, where they can rapidly advance to higher-paying jobs. Why cut off the bottom rung by hiking the minimum wage so dramatically?

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Offline Oceander

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #1 on: December 15, 2013, 11:01:48 AM »
Maybe, maybe not.  Raising it to $10.10 probably would, but raising it some smaller amount, like to $8.00, probably wouldn't have substantial negative effects.

Offline DCPatriot

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #2 on: December 15, 2013, 11:14:24 AM »
As somebody that was self-employed most of my working life, I naturally view it from the business owner's standpoint.

If the business 'required' me to have 20 employees in order for it to run efficiently....and each earned the current minimum wage at say, $7.50 per hour...what would I do first?  Raise prices across the board?  Or let some people go?

Let some people go! 

Go to the 20 people and explain that if you're going to have essentially DOUBLE their wages....you're going to expect a much better employee in terms of speed and accuracy and dependability.

They come in one day to find that half of the fellow employees are gone....and that they were selected because they're appreciated and we felt they were capable of rising to the next level, etc..

You'd be surprised at how much hidden talent and ability there is in people that get recognized and rewarded....even though it's a mandated 'reward' at $15 per hour.

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Offline DCPatriot

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #3 on: December 15, 2013, 05:43:32 PM »
"It aint what you don't know that kills you.  It's what you know that aint so!" ...Theodore Sturgeon

"If you want to change the world, go home and love your family".    ...Mother Teresa

Offline WAYNE

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #4 on: December 16, 2013, 06:57:13 AM »
      IMNSHO raising the minimum wage would have an effect very much akin to the doubling of the gas prices over the last 5 years . Costs rise .
      The public mostly (LIV) dont see or realize the real affect because of the way the gov reports COLAs. Especially food and gas which are tied together never are reported. The cost of living is never reported correctly.

Offline massadvj

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #5 on: December 16, 2013, 08:05:18 AM »
So long as the raise in minimum wage was below the wage/supply equilibrium, in theory it didn't matter.  At least as far as economic theory.  But psychological theory is another matter.  Raising the minimum wage changed employee perceptions about who determined their salaries and affected elections.  Elections then changed the entire dynamic of the economy to one that enabled government to be a legitimate racketeer against free enterprise.  So now the minimum wage has escalated to the point that the politicians want to raise it well above the wage/supply equilibrium, which will indeed have serious economic consequences.

As far as whether the minimum wage hurts the people it is supposed to help, I would argue that nearly all progressive policies have that effect.

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #6 on: December 16, 2013, 08:15:38 AM »
So long as the raise in minimum wage was below the wage/supply equilibrium, in theory it didn't matter.  At least as far as economic theory.  But psychological theory is another matter.  Raising the minimum wage changed employee perceptions about who determined their salaries and affected elections.  Elections then changed the entire dynamic of the economy to one that enabled government to be a legitimate racketeer against free enterprise.  So now the minimum wage has escalated to the point that the politicians want to raise it well above the wage/supply equilibrium, which will indeed have serious economic consequences.

As far as whether the minimum wage hurts the people it is supposed to help, I would argue that nearly all progressive policies have that effect.

That is a rather good point that never seems to get mentioned. No need to work hard, my basic needs are mandated by the government. Try fostering a work ethic in that sort of environment.
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Offline GourmetDan

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #7 on: December 16, 2013, 12:26:09 PM »

Try fostering a work ethic in that sort of environment.


How is the work ethic over in merry, old England?


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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #8 on: December 16, 2013, 12:33:33 PM »
How is the work ethic over in merry, old England?

It seems about the same as you guys have. 52% work. 47% don't.

At least our "don'ts" do not get an income tax rebate on tax they never paid.
« Last Edit: December 16, 2013, 12:34:18 PM by EC »
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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #9 on: December 16, 2013, 12:37:41 PM »
It seems about the same as you guys have. 52% work. 47% don't.

At least our "don'ts" do not get an income tax rebate on tax they never paid.

I would have thought that you guys were further down the socialism path than we are...


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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #10 on: December 16, 2013, 12:45:51 PM »
I would have thought that you guys were further down the socialism path than we are...

In some ways, we are. In other ways, not so much. It's the English way, being as inefficient as possible.  :whistle:

But the tax rebates to none tax payers? That makes every single one of us go "What?!" We have some stupid policies, but that takes the prize. Of course, we also don't do tax returns if we are employed. It is automatic. No paperwork involved.

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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #11 on: December 16, 2013, 12:47:12 PM »
It seems about the same as you guys have. 52% work. 47% don't.

At least our "don'ts" do not get an income tax rebate on tax they never paid.

Nor do they pay taxes on "income" earned outside the UK.
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Re: Raising the Minimum Wage Would Hurt the People It's Supposed to Help
« Reply #12 on: December 16, 2013, 12:50:54 PM »
So long as the raise in minimum wage was below the wage/supply equilibrium, in theory it didn't matter.  At least as far as economic theory.  But psychological theory is another matter.  Raising the minimum wage changed employee perceptions about who determined their salaries and affected elections.  Elections then changed the entire dynamic of the economy to one that enabled government to be a legitimate racketeer against free enterprise.  So now the minimum wage has escalated to the point that the politicians want to raise it well above the wage/supply equilibrium, which will indeed have serious economic consequences.

As far as whether the minimum wage hurts the people it is supposed to help, I would argue that nearly all progressive policies have that effect.

That is all true Victor but not really what this is all about. This is REALLY all about the fact that in many cases union wage rates are tieded to the minimum wage and those covered under that AUTOMATICALLY get a wage increase when the minimum wage rate is increased!
« Last Edit: December 16, 2013, 12:51:39 PM by Bigun »
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