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#RaiseTheWage Campaign Ignores Economic Reality

#RaiseTheWage Campaign Ignores Economic Reality

The proposed federal minimum wage raise could come at enormous cost.

The White House is taking to Twitter in its appeal for an increase in the federal minimum wage. On Monday, the @WhiteHouse Twitter account posted a graphic touting their “#RaiseTheWage” campaign:

White-house-tweet-america-raise

Unfortunately, the proposed minimum wage raise could come at enormous cost.

This year, the Congressional Budget Office released a report stating that raising the minimum wage from $7.25 to $10.10 would help bring 900,000 people above the poverty level–at a loss of over 500,000 American jobs by 2016.

This policy would also cause the income of people who remain unemployed (or who are one of the 500,000 Americans whose employers are forced to eliminate jobs) to fall dramatically, and make it more difficult for low-wage workers to gain employment. The net effect on the budget deficit over the next decade remains unclear.

The CBO report contains an interesting tidbit about the interaction between a minimum wage increase, and dependency on federal benefits to make ends meet:

As a group, workers with increased earnings would pay more in taxes and receive less in federal benefits of certain types than they would have otherwise. However, people who became jobless because of the minimum-wage increase, business owners, and consumers facing higher prices would see a reduction in real income and would collectively pay less in taxes and receive more in federal benefits than they would have otherwise.

Lost jobs, lower wages, and new names on the welfare rolls? No wonder only 13 states have chosen to raise their minimum wage.

White-house-tweet-raise-minimum-wage

The crux of the problem with federally-mandated programs is that they prevent states from doing what the states are meant to do–act as “laboratories” for policy experiments.

The failure of Obamacare, the entitlement crisis, and the job-killing overreach of the EPA are proof positive that the big government experiment has failed. Now, the Obama Administration is attempting to jam through another mandate that would force half a million Americans to throw themselves at the mercy of the federal government.

There’s a reason why President Obama’s approval rating just hit an all-time low of 41%–maybe it’s because the American people have finally begun to realize that the man they elected to lead the country has no real desire to see that country–or its families–succeed.

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Comments

Juba Doobai! | June 24, 2014 at 9:02 am

America deserves relief from stupid Democrat economic policies.

It’s funny, but I know of no economist who says raising the minimum wage will not cost jobs…they all know it will.

The only questions is: how much?

Some say it is worth the loss in net jobs. All of them are employed, ironically. And usually by the academe or unions.

Like I say… Funny.

I don’t know the rest of you, but I found problems with the links in the home page.

They don’t work!

They somehow send me back to home.

This is what we can expect when we elect people who have never, ever worked at a real job a single day in their lives.

Nothing happens in isolation, especially with regard to a country’s economics.

Here is Fred Barnes interviewing Thomas Sowell:

Fred Barnes: In your early years, you were a Marxist. What happened?’
Thomas Sowell: “I went to the University of Chicago as a Marxist. After a year of studying under Milton Friedman, I was still a Marxist. But, one summer of working in the government was enough to start turning around.
Barnes: Really? What happened to you there?
Sowell: Well, nothing happened to me. But, I realized that the government was nowhere capable of doing what people on the left wanted the government to do, and that; in fact, we’d be lucky if they didn’t make things worse. For example, I was in the Labor Department and they administered the minimum wage law. To me, the question was did minimum wage laws make poor people better off or worse off?
That was not the question for them. The minimum wage law provided one-third of their total budget and they weren’t going to look at this in this other way. And as I tried to get into the question ‘does this cause unemployment’ and stuff like that, there was no enthusiasm whatsoever for that line of reasoning.

Obama can #RaisetheWage after he #PayMyObamacareFines, #PayMyIncreasedPremiums, #PayMyPayrollTaxes and #RecoverLernerEmails

My tweet:

#RaiseTheWage Let workers take all their pay in cash rather than mandating that they spend it on overpriced health insurance etc.

MouseTheLuckyDog | June 24, 2014 at 11:15 am

I look forward to a raise in the minimum wage.
Fast food places have robotic machines capable of replacing the workers. Raising the minimum wage would mean that the fast food places would never again screw up my order.

    Spiny Norman in reply to MouseTheLuckyDog. | June 24, 2014 at 11:54 am

    Well… the ESL immigrant workers in the kitchen can still get it wrong…

    MaggotAtBroadAndWall in reply to MouseTheLuckyDog. | June 24, 2014 at 12:04 pm

    Your cheeseburgers will likely be cheaper, too. When they put a self serve touch screen kiosk on the counter and you place your own order and pay for it by swiping your debit/credit card, they’ll be able to eliminate more jobs.

    By replacing unskilled labor with an electronic gizmo, the owner can avoid paying not only the higher wages, but also overtime pay, health insurance, sick pay, vacation pay, social security, medicare, and the lost productivity that results from having to train new workers to compensate for the huge employee turnover.

    Avoiding all of those costs in favor of an electronic gizmo will likely mean cheaper cheeseburgers. It’s going to happen anyway, but government intervening where it should not is only going to provide an incentive to transition to technology sooner rather than later.

    BTW, it’s not just fast food, either. I can’t remember which “casual dining” chain it is, but the technology is now so cheap that one of those chains is now installing touch screen technology at each table. If I remember right, the table top itself is the wireless touchscreen monitor. No extra wires, cables, or other equipment.

      Spiny Norman in reply to MaggotAtBroadAndWall. | June 24, 2014 at 12:14 pm

      By replacing unskilled labor with an electronic gizmo, the owner can avoid paying not only the higher wages, but also overtime pay, health insurance, sick pay, vacation pay, social security, medicare, and the lost productivity that results from having to train new workers to compensate for the huge employee turnover.

      Well, not really. The order kiosks (electronic gizmos) only replace the people at the front counter, but the kitchen crew will still be there — and still almost entirely immigrants (legal or otherwise). I know of no existing automated McDonald’s kitchens (if such equipment existed, McD would surely be the first to use it).

        healthguyfsu in reply to Spiny Norman. | June 24, 2014 at 8:43 pm

        I can’t tell if you are being facetious or not?

        There are automated machines that make frozen meals. Do you think each one of those tv dinners (that come already cooked) are cooked by people and transferred to those little dishes.

        Not only is the technology out there, it has been prototype tested and quality controlled. You need a few human employees to maintain the machines and load them with frozen or processed crap in large batches.

        Why would it be particularly complicated to program an amount of time to heat up a burger of roughly uniform thickness? If you are thinking android running around the kitchen flipping burgers then you are thinking the wrong kind of robot.

          Spiny Norman in reply to healthguyfsu. | June 25, 2014 at 3:04 pm

          We’re talking about fast food restaurants, like McDonald’s, not processing plants making Banquet frozen dinners, which use huge machines to produce the product. They’re not something than can be easily scaled down to a corner burger joint.

      Not at all will replacing fast-food workers with electronic gizmos reduce the price of a cheeseburger.

      Management will cut costs by firing workers, raise prices by claiming expense of installing said gizmos, and pocket the difference as they always have. The rich get richer and the poor get poorer.

For Obama, it doesn’t matter if jobs are lost. The people who see their pay increase will thank him and any Dems who vote for it, while the people who lose jobs and (especially) the people who lose opportunities to get hired in the first place will blame someone else.

The minimum-wage increase is just another example of Democrats pretending to care about the poor — at other people’s expense (poor and not).

    Spiny Norman in reply to Radegunda. | June 24, 2014 at 12:06 pm

    Democrat payback to Big Labor for all the years of guaranteed votes: many, if not most, union wages are based on a fixed amount above minimum wage. When the minimum wage increases, union wages automatically increase.

This campaign demonstrates a distinct inability to distinguish between capital (i.e. wealth) and money (i.e. debt).

There are two scenarios which may justify diluting the enumeration of private capital. One, to compensate for structural disparity, inflation, etc., which results in unmanageable cost of living. Two, to compensate for locked capital, which encumbers economic development.

Just as Obamacare was a mandate to assure available and affordable health care, the “raise minimum wage campaign” is a call for a mandate to increase wealth. Well, if nothing else, it will motivate people to be more productive, in order to compensate for a progressive devaluation of capital and labor. Perhaps this is the right response to trillion dollar deficits, Obamacare, illegal or unmeasured immigration, and other leveraging schemes. It’s more likely that this will simply distort real supply and actual demand, as well as circumvent natural and social feedback mechanisms, requiring progressive compensatory measures.

    tom swift in reply to n.n. | June 24, 2014 at 1:19 pm

    It’s more likely that this will simply distort real supply and actual demand

    Any control scheme (price controls, minimum wages, tariffs, etc) is an attempt to distort supply & demand.

      n.n in reply to tom swift. | June 24, 2014 at 9:20 pm

      True. This particular scheme is intended to obfuscate the consequences of issues which it purports to resolve. Not all leverage is created equal.

Wish they weren’t such cheapskates. We could all be well off if the minimum wage was $250/hour. Just think of the increased tax collections! What could go wrong? {/sarc}

Phillep Harding | June 24, 2014 at 3:17 pm

Minimum wages are destructive, but I can see that inflation has reduced the value of the dollar so that $10.10 is now worth what the old minimum wage was worth.

We need more changes than just dumping the minimum wage. We need getting rid of a lot of local zoning laws that force low income workers to live an unrealistic distance from jobs or live in over sized housing that costs more, gas prices are too high, mass transit stinks, food stamps can be used for non-food items, etc, etc. It’s all a mess. It all adds up, and includes more than I can think of at the moment.

    Chem_Geek in reply to Phillep Harding. | June 24, 2014 at 5:24 pm

    If Management hadn’t been giving themselves raises to 300 times the worker wage, up from 30 times, and keeping real worker wages constant while worker productivity increased dramatically, then we wouldn’t have this problem.

    Support a Maximum Wage. Want to pay your workers a penny a day? Fine! Go right ahead! But you can only give yourself as the Management, say, 30 cents a day.

      n.n in reply to Chem_Geek. | June 24, 2014 at 9:14 pm

      Management followed bureaucrats followed unions followed activists followed welfare. Each group which possessed sufficient leverage sought compensation for the consequences of progressive policies, including arbitrary minimum wage mandates.

      The ball of yarn is so convoluted that it seems impossible for anyone to unwind without forcing a dysfunctional convergence. So, we have well-meaning policies like “Obamacare”, or progressive minimum wage, which not only preserve the status quo, but actually exacerbate it.

      Ragspierre in reply to Chem_Geek. | June 25, 2014 at 6:35 am

      You simply insist on showing your stupid here, don’t you?

      “We” don’t have a “problem”, first. Not the one to which you obliquely refer, anyhow.

      Pres. ScamWOW has a raft of “problems”, so he deploys the red herring of an increase in the minimum wage, knowing that it will actually harm the population of “working people”.

      You also make the remarkable stupid mistake of simply repeating Collectivist propaganda.

      Instead of “management”, why don’t you use a more informative comparison, like the earnings of a Washington bureaucrat, including perks, versus the people at the local McDonalds? One actually produces a good, the other consumes other people’s treasure. That is where true “inequality” is greatest by any measure you might care to use.

      When you have your own business, you can voluntarily pay people who work for you anything you want to. Until then, STFU about things you…

      1. do not comprehend (like the profit motive), and

      2. are not willing to put up your own money for.

Worker productivity has dramatically increased? What would do you live in? What business do you work in where worker productivity has increased? If you can send some of those workers to me maybe I could pay them more money, but it doesn’t happen. Today’s worker is all about themselves and if they don’t get what they want they point the finger at someone else. Site me a skill set that dictates an increased wage an I am willing to pay it. Don’t tell me you deserve more pay. Half the workers today don’t show up and 25 percent of those left feel you owe them more money just because they showed up, while the remaining 25 percent deserve even more that I can afford to pay. What risk does an employee have in the business he works at? What responsibility does he have to make sure the business is successful? Some feel a responsibility, while others could care less because they feel they do not make enough to care.

    Ragspierre in reply to pfreel. | June 25, 2014 at 6:42 am

    Actually, American workers HAVE increased productivity pretty steadily over time. American workers are some of the most (if not THE most) productive in the world, which is why some things are most economically produced here even though our wage rates are much higher relative to other places.

    American workers are so productive for mostly ONE reason: the capital investment in production.

    That’s it.

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