Raising Minimum Wage Won’t Fix The Economy or Promote Job Growth

Today at Starbucks, I was talking to a painter, he is self-employed, and runs a good little business. Although the economy isn’t so great, he is booked up all summer long and is trying to schedule 2 weeks where he can take a vacation and go to some beach city along the coast, because we live in a very hot desert in the summertime. He’d like to get more help, but he told me he has to train people, otherwise they just slow him down. He has two helpers which are quite good, but he could easily use two more, he pays them about $18 per hour.

I explained to him that they’re raising the minimum wage law, and he said that was terrible because in reality new workers should be paying him, as he is training them on the job for the first two weeks. In fact, they get in his way, make him redo things, and get on his nerves until they are fully trained. If he has to pay them $9.80 per hour which is what some folks in the federal government are proposing, then he just won’t hire anybody else he said.

Plus, he’s still worried about exactly what’s going to happen with ObamaCare and he figures that will cost him $4500 per year for each of the current employees he already has, so the last thing he wants to do is hire two more. In other words, he will just stay busy, keep the work backed up, not grow his business, and not hire anyone. Indeed, at this point I would like to ask my reader how this helps job growth in our great country. That is of course a rhetorical question because the answer is; it doesn’t.

There were two interesting articles in the American Business Journals on July 27, 2012 titled; “Federal minimum wage would reach $9.80 an hour after proposed increase,” and; ” Democrats push for $9.80 minimum wage,” and some might think this is going to be a good thing for poorer Americans, but that’s not true, that thought process comes directly from Social Theory, which hasn’t worked anywhere – look at Europe, especially Spain and Greece with unemployment well over 25% right now.

The article stated; “Legislation was introduced today in Congress that, if passed, would raise the federal minimum wage to $9.80 an hour within the next three years.” I think what many people in Congress don’t realize, perhaps because they’ve never run a business is that small businesses if they are forced to pay a higher rate to every new employee, they simply won’t hire as many people. This means more people will be on unemployment benefits, collecting food stamps, and not paying taxes into the system.

If people aren’t making money or paying taxes, how does that help the federal government meet its goal of income to give all the services it promises, and stop deficit spending? Again, it doesn’t. Indeed, it’s too bad that there are far too many folks in our federal government that do not understand economics, and worse American voters who don’t get it either. Is it a grand conspiracy you ask? Is this why liberal academia is no longer teaching economics as a required course?

I mean, they teach all sorts of liberal arts nonsense, political correctness classes, and you name it, but they aren’t making economics mandatory anymore. How can they justify the cost and tuition fees, without educating folks? No wonder no one can balance a checkbook, understand simple interest, or go vote for politicians who trash and capitalism. Indeed I hope you will please consider all this and think on it.