Many of us said this would happen- Raise the Minimum Wage and people would lose their jobs. No one ever believes it.
Lost in the noise of $4.00 gasoline, and the Presidential Elections, not to mention the meltdown of markets too numerous to mention, has been the impact of the Minimum Wage increases that began in July 2007, occurred again in July 2008, and will make a repeat performance in July 2009.
By July 2009, the Minimum Wage will have increased from $5.15 to $7.25. Do you think this in any way could have been part of the cause of the economic slowdown in the United States? Each hourly employee will cost over $4300 more per year after July 2009 means that a lot of goods or services must be sold just to cover the increases in Minimum Wage.
My brother runs a small business in a small town, with gross receipts around $1 million or so. Business has been tough. The first two minimum wage increases had a major impact on his staffing. When things slowed down, he had to let employees go sooner than he would have in the past. If and when things improve, it will take longer to justify adding additional employees. I am certain he is not alone.
Prior to July of 2007, the US unemployment rate was 4.50%, and we raised the minimum wage to $5.85 per hour.
Prior to July of 2008, we had just completed the second quarter of the year, and our country had a positive GDP. We were still growing. Despite $4 gasoline. Despite a slowing housing market. Despite a declining real estate market. Despite the rising cost of labor.
Prior to July of 2008, Unemployment was 5.50%. Not the best we have had over the last 8 years, but certainly not the worst. And when the minimum wage increased yet again, so did the wages of many employees who had contracts tied to the minimum wage in one form or fashion (yet again).
Wages went up, and so has unemployment. I have not heard one mention of the increase in minimum wage as related to unemployment, and I am not sure why. All of those opposed to the minimum wage increase certainly stated this would be a potential outcome. They should be saying "I told you so", but all I am hearing is silence. Have we merely forgotten?
Rest assured, it will not be forgotten for much longer. In July of 2009, when the next increase is scheduled to go into effect, which will raise the hourly minimum to $7.25 per hour, I expect an outcry from the small businesses of America.
Are we going to have someone propose to suspend that increase until our economic situation improves? Will Barney Frank, who is so adamant about controlling executive pay, also be willing to reduce Minimum Wage pay? Or will businesses such as my brother's have to take another hit to their cash flow that they cannot afford at this time, driving even more small businesses into bankruptcy?
Certainly, a Democratic President tied to labor as Barack Obama is, will not sign such a bill regardless of the status of our economy. The evidence will be ignored, and we will have ample evidence that the higher the minimum wage climbs, the higher our levels of unemployment soon follow. Will George W. Bush be blamed for this as well when the current administrations looks for someone to blame?
I am not blaming all of the unemployment woes on the minimum wage increases that have been pushed upon the American businesses. But I can say without a doubt that there are people unemployed today because minimum wage is higher today than it was three years ago. And there will be more unemployed a year from now because the minimum wage will be higher still.
When and if the economy does recover, it will take longer than in the past, as employers have to generate even more revenue than before to justify the hiring of additional staff.
If those people who have lost their jobs because of the Minimum wage increases were still working today, they would be better off, even at the lower wages.
How many would like to have their jobs back if they could at the old wage of $5.15. $5.15 will always be better than out of work and no prospects.
Government is not fixing our problems. Government is creating our problems. Higher minimum wages that employers cannot afford to pay make the politicians feel good, but they destroy real jobs.
When the employer must raise wages to attract employees, that is a real wage increase that is good for everyone involved. The business does it because it makes financial sense, and the employee gets it because they are worth it. That is why capitalism works.
Remember this in July of 2009 as we get that next increase, and capitalism seems to be failing us. It's not capitalism that is failing, it is once again the Federal Government.
These are my thoughts.
I would love to hear yours.
©2009 EJ Moosa, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Friday, February 13, 2009
Last modified: Friday, February 13, 2009
The views expressed in this article are those of EJ Moosa only and do not represent the views of Nolan Chart, LLC or its affiliates. EJ Moosa is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
Report violation by EJ Moosa of Nolan Chart LLC's terms of use policy.
| More Articles By EJ Moosa |
Reader Comments:
Posted By: Wingnut
Date: 2009-02-13 03:57:04
Hi EJ and others. EJ, your report is about the goings-on INSIDE the pyramid scheme called capitalism, caused by rat-racing via SOME FOLK condoning and promoting the use of "economies" and "ownership". The battles inside the capitalism pyramid/imperialism... is indeed interesting and brutal, and the tallying-of and tug-o-warring-over greenbacks... is quite tense and gruesome. You use many "we" and "our" in your post... and I can only assume that your "we" and "our" means those that use economies and are joined members of the AmWay (American Way) pyramid scheme (capitalism). The AmWay/FreeMason pyramid scheme symbol is right there in plain sight on the back of the USA dollar bill, so everyone knows its a pyramid scheme. Do a Google IMAGE SEARCH for 'pyramid of capitalist' to see the full color picture.... from when capitalism's cover was first blown... back in 1911.
Now, SOME of us Americans... have decided to fight for the abolishment of economies and ownership. I am one. I am an anti-capitalism-ist (A system fighter, not a fighter of people performing roles IN that system). USA folks like me made-up our own pledge of allegience, and de-avowed the standard one. MY pledge of allegience essentially adjusts the "republic for which it stands" to EXCLUDE economies, ownership, and the felony pyramid scheme-o-servitude-infestation called capitalism. I love America. aI love the enitre planet and all living things, for that matter. I just hate competing and rat-racing inequality systems. I am also a proclaimed Christian, socialist, communalist, bughugger, hippy, and lots and lots more characteristics. But I DO NOT condone economies and ownership of God-created Earth materials. Such things cause rat-racing and enjoyment addictions, and that leads to felony "pay up or lose your wellbeing" pyramid schemes. It also forces "our" 18 year olds to reverse policy from childhood SHARE, to capitalism FIGHT, and "get a job or starve" is exactly the same as "join the competer's church, OR ELSE!". That is forced religion... a felony.
So EJ, I humbly and personally invite you outside of the economy and pyramid... and onto the TRUE "get real" dirt that lies just outside-of the pyramid rat-racing system. Come out here, stand and chat with me, and let's examine the pyramid scheme... and the use of economies... from the outside. Out here... economies and competitive systems look quite ridiculous, and its very easy to see that cooperative systems are needed instead. Once you stand OUT here with "us" who watch economies and rat-racing over titles/empowerments from an external view, you'll shake your head in disgust just like the other "we" and "our" that stand outside and shake "our" heads in disgust. Come view economies from THIS "our" and "we" group... and then make sure you write an article someday that details what you've seen "out here" amongst the REAL Christian anti-capitalism "we" and "our". We're into communes, potlucks, barnraisings, and stone soup. We're hoping for a worldwide societal paradigm shift to a more Quaker-ish or Amish pattern and thought. Come join "us" just for a moment, and write an article of the view from "out here" if you would. Just stare at the pyramid scheme symbol on the back of the USA dollar.... until you can imagine yourself OUTSIDE of it, and not reporting on the rat-racing and bickering and tug-o-warring and cookieplate-chasing going-on INSIDE it. I think you'll find it interesting... and we're very loving people... us anti-caps. We welcome all comers with hugs and extreme cordiality. After your visit, maybe we'll talk of abolishing economies and ownership... and doing a "all on the same planet" team... taking down all international borders and similar yard fences. Best Regards!
Larry "Wingnut" Wendlandt
MaStars - Mothers Against Stuff That Ain't Right
(anti-capitalism-ists)
Bessemer MI USA
Posted By: EJ
Date: 2009-02-13 08:33:14
Larry,
Um, thanks but no thanks. The difference between anti-capitialsm and capitalism is that we know 100% for certain that anti-capitalism does not work.
Capitalism only falters when we allow the anti-capitalists to tinker with it's operation.
Thanks for the feedback.
EJ