Why Raising The Minimum Wage Does Not Help Anyone

Early in my career, I was an engineer and middle manager in an electronic company. At the time of an increase in the minimum wage, I had 10 technicians who directly worked for me. None of my employees made minimum wage, and in fact were substantially above it.

When the new rate was announced, people who were already paid at the new rate were suddenly very unhappy because now they were working for minimum wage again. They all thought they should get a raise too. Then the group immediately above them also wanted a raise because not getting one put them one step lower on the ladder.

And so it went. Everyone wanted and got a pay increase because of a raise in the minimum. All well and good, except for two things. One is that some people lost their jobs because their employers could no longer afford them at the new rates. The second is that it caused the prices of all goods and services to go up because of the new pay scales.

The bulk of the costs in producing any product is wages and taxes. Its not profits which nation wide across all economic sectors is only about 9%. Mostly, its wages and taxes. So, taxes also had to go up to account for the increase in the wages of government employees.

The net result was that a year later, some had no jobs, and no one else was wealthier because of the inflation caused by the minimum wage increase.

On top of that, these increased costs made American companies less competitive in foreign markets, leading to even more job loss.

I witnessed the same phenomenon every time the minimum wage was increased.

So this actually does no good for the people it is supposed to help.
It hurts people on fixed incomes because of the inflation.
It hurts American business in the global economy.

This is liberal economics a work. Great for buying votes, but terrible for the country.

This entry was posted in Economy. Bookmark the permalink.

Comments are closed.