Minimum Wage Increase

Well, we’ve done it again.  Though this time, to be fair, we knew it was coming.  The minimum wage increased another $0.70 and is now at $7.25.

I have several personal stories from friends of mine explaining how hard it is for their teen child to find a job.  I suspect that it’s only going to get harder.  Employers are already struggling to make ends meet and now they’re forced to make due with a 10% higher labor force.  If this were any other commodity, experts would understand that somewhere the employer would have to cut.  For example, if the price of electricity went up by 10%, the businessman would be forced to make up for that cost somewhere else.  Or, if the price of milk went up by 10%, again, he would make up for it in other places.

I’ve been awfully hard on the minimum wage proponents and have done some thinking.  As one of the core pillars of my argument, raising the minimum wage may actually impact only a very few.  Only a very small percentage of Americans actually make the minimum wage.  Next, the employer may react not be cutting workers, but by reducing hours.  If done perfectly, that is each worker would see a 10% decrease in hours worked, he comes out ahead; he gets the same pay as before, but does so at a 10% discount in his time.  And last, labor may only be a small part of an individual employers expenses.  For those businesses with small labor costs, the increase will be negligible.

Last, before I walk away from this for a bit, is my favorite question for the pro-minimum wage folks.  If raising the wage 70 cents is a good idea, why not raise it to 20 bucks?

The Michigan Democratic Party is considering asking voters to raise the state’s minimum wage from the current $7.40 an hour to a national high of $10 an hour, increase unemployment benefits and require all employers to provide health coverage.


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