Class Warfare Blog

November 11, 2013

More Min Wage BS

The minimum wage push (to higher levels) is gathering steam and, of course, the usual conservative BS comes out. It will cost jobs! It will hurt business! Actually what they are saying is: but we have a sweet deal, the government is underwriting all of our sales!

These businesses, fast food vendors in the forefront but also the Wal-Marts and KMarts of the world, underpay their employees and then urge them to go on welfare (SNAP, housing assistance, etc.) to make up what they need to live on. How many workers would take their lousy jobs if they didn’t have that extra support? Would you work hard to earn just enough for your kids to starve?

Let’s look at the critics objections. For one, they say raising the minimum wage will cost jobs. This is a zero sum argument, namely their employers only have so much money to pay workers and if they are required to pay them more, they will not be able to hire so many. It is also a stupid argument, one they trot out every time in the hopes that the stupid will buy it.

Here’s what happens. The wages of employees go up. The employer, so that he is not at a competitive disadvantage, raises prices. Those of his competitors who do not start to feel the pinch and noticing that the guys who did raise their prices didn’t go belly up, raise their prices also. (Businesses in a “market segment” have collaborated in the past to set prices, which is illegal but they do much the same thing now with “market research” and copy-catting.) Now, when the prices go up, sales may go down slightly (slightly because we are only talking about a small price increase) but the price increases are always big enough to cover the increased wages and the slight sales drop. Soon, everything becomes the new normal.

I remember McDonald’s hamburgers when they were $0.19 each. While they were building store after store after store to sell billions of the damned things, they somehow were able to raise their prices, too. (Try to get a $0.19 burger anywhere, I dare you.) Why did their prices go up? Well, their costs went up. They are fine with paying more for ground beef and potatoes, buy damned if they are going to raise prices for, ugh, employees.

If this is too much a hand waving argument, consider gasoline sales. Virtually everybody needs to buy gasoline, either directly for their own vehicles, or indirectly for cabs, for buses (I know it is usually diesel), and planes (I know it is aviation gas). Look at the price of gas on the following chart. Gas-Price-History

The price of gas nationally was below $2.00 per gallon in the year 2000 and by 2008 it hit a high of $4.39 per gallon. That’s quite a price climb. (A MacBurger would have to go from $3.89 to $8.54 to match that.) What do you think happened to sales? Here’s what happened:gas sales chartLook at the segment of the line between 2000 and 2008. Sales went up, up, up. And don’t say that consumers (I hate that term) have no options to lower their gasoline consumption. I can and have reduced my consumption over the years by carpooling, avoiding unnecessary trips, combining shopping trips, planning trips to use less gas, shopping by phone and Internet, etc. Also, consider that over that time period, cars with much higher gas mileage became available. (We traded in one car that got 23 mpg and got another that got 28 mpg and we could have gotten a much higher mpg vehicle if that had been a priority.)

Stop with the min wage BS, please. Paying current min wage workers a higher min wage ($15/hr would be good and don’t say you can’t, because that is effectively what they were getting thirty years ago) would mean that they would need less support and would be paying their own way rather than having to be subsidized by the government. And if you are against any form of welfare, you should be for higher wages so people can pay for their own basics, not the other way around.

And maybe, just maybe, the prices at fast food places should be a little higher than they are. Their custom isn’t the most healthy food available.

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4 Comments »

  1. It’s a curious position these silly conservatives have put themselves in. On one hand they hate the idea of raising minimum wage (for all of the reasons cited above), while in parallel they hate the idea of government subsidies. Hmmm, why are government subsidies necessary?

    Comment by R. L. Culpeper — November 11, 2013 @ 5:22 pm | Reply

  2. $17p/h in Aust.

    Comment by john zande — November 12, 2013 @ 4:53 am | Reply

  3. “These businesses, fast food vendors in the forefront but also the Wal-Marts and KMarts of the world, underpay their employees and then urge them to go on welfare (SNAP, housing assistance, etc.) to make up what they need to live on.”</i.

    These people are sweating and shifting uncomfortably in their seats. Walmart has a vigorous ad campaign out to demonstrate how their workers have multiple benefits and career opportunities. I suspect they are beginning to make some improvements but these ads tend to show the exception rather than the norm.

    And what’s missing here is the way their cheap overseas labor is treated in pay and sweatshop conditions that enables them to keep their prices so low. Add to this the fact that for every Walmart built means other small businesses who can’t compete with their under pricing practices goes out of business and some of their employees, if their “lucky” then have to work for Walmart, usally as a part timer. The net effect in many cases is job loss for such communities

    Comment by lbwoodgate — November 12, 2013 @ 6:34 am | Reply

    • In economics there is a saying that “the only thing worse than being exploited (for one’s labor) is not being exploited.” Which says a little something about economists but also reality. If their labor is honored and they are treated well, workers cheap labor would make them more money than they could get otherwise which would elevate their wages over time. This has happened in China. But also, there have been huge abuses in China, so it is a mixed bag. Over here, wages have been deliberated suppressed to throw the costs onto government and then the assholes have the gall to complain about their taxes and about government “socialism.”

      PS We’ve moved (again)! Just change the Apt # from 28C to 17A (110 feet down and about 30 feet east). Effective Date: October 1, 2013

      *Entia non sunt multiplicanda praeter necessitatem.* ************** Steve Ruis

      Comment by stephenpruis — November 12, 2013 @ 7:06 am | Reply


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