The federally mandated minimum wage increases to $6.55 an hour today. Increased minimum wages and “living wage” laws are being put into effect city, state, and nationwide.
This is a horrible idea. The market should always determine what an hours worth of work is worth. Currently we are experiencing double digit inflation; the last thing we need is more (artificial) upward price pressure.
The quick and dirty version of the economics behind this is that if an employer has to pay more to his employees he has three options:
1. Lay off employees to keep his wage cost the same.
2. Pass the increase in cost along to his customers.
3. Do nothing lose money, and go out of business.
I am not a fan of minimum wage increases, and yes I do in fact know what it feels like to make minimum wage. These laws increase inflationary pressures, and unemployment. The argument for these increases is that it helps the working poor, minorities, and single mothers. The truth is that the majority of people earning the minimum wage are part time teenagers’ and the elderly.
Politicians rage against the off-shoring of American jobs to Indian Mexico and China, what do you think the direct result of our new higher wages will be?
Good points all.