Increase Of Minimum Wage Is Lose-Lose

In response to the article in the Readers’ Forum, “Minimum Wage Hike Is Desperately Needed” let me put in my two cents worth, excuse the pun. Studies reveal that almost 75 percent of economists think that the minimum wage increases unemployment, and only 10 percent believe that the minimum wage has a beneficial effect. That 10 percent must work for the U.S. government.

As a businessman for over 25 years and the president of a fairly substantial veterans organization let me explain what happens. If you have a company with 50 employees working 20 hours each a week at $7.25 per hour, simple math demonstrates that your weekly payroll (without the employers share of social security and other federal and state assessments) will be $7,250. Simple math also dictates that your annual payroll will be more than $377,000 at the $7.25 rate. A minimum wage increase from $7.25 to $9 an hour represents a more than 24 percent increase in your payroll expense or put another way your annual payroll will now be over $468,000 with various mandated taxes. That is an increase in your payroll of over $91,000 annually. Only an uninformed individual or bureaucrat would think that an increase in the minimum wage would be good for our economy and the depressed employment market. Plus it has been documentation that it actually has a negative effect for those seeking employment.

The $91,000 plus of additional expenses to a businesses bottom line is not reimbursed to the company by the tooth fairy. A company will make adjustments such as passing on the additional expense to the consumer in the form of higher prices or terminate of some of their employees. And so it goes on and on with the government looking like a modern day Robin Hood when in actuality their incompetent blunders hurt companies and have a negative impact on job creation, the economy and of course their constituents.

One argument that the government always uses is that the increase in the minimum wage will stimulate the economy because people will spend more if they are earning more. That is a specious argument at best. As soon as the minimum wage increase goes into effect companies will either increase their prices to you, the consumer, or lay you off. There will be fewer jobs with fewer workers and your minimum wage increase will be offset by your increase in the many consumer goods and service that you purchase. It is a lose-lose situation and you should not gamble on it. So, here you have another brilliant move by those who want you to believe they are here to help you. Just look around you and compare prices and the job market from past to the present. Also consider the fact that many seniors have needed to work part time to supplement their Social Security and retirement income. The minimum wage increase will hurt not only the young but the elderly as well.

It’s time to think for ourselves and take care of our own needs. If you want more money there are many skilled and unskilled well paying jobs out there if you take the initiative to find them. Relying on government to do it for you is a mistake. As Ronald Reagan once said “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’ And as I always say, sorry – some jobs are not worth $9 an hour.

Bruce Piatz is a Jamestown resident and business owner.