Monday, January 09, 2006

Increasing the Minimum Wage

Matt at Left in the West is arguing for an increase in the Mimimum Wage of $1 per hour. Now that may not seem to be very much, but if you are a small business, cost control is your biggest problem. Too much outflow not matched by income results in no employment.
Another question though: Why only a $1 per hour increase. If $1 is good, wouldn't $2 be better? In fact, let's make it $1000 per hour for minimum wage. This way everyone would make at least a quarter of a million dollars a year. That would be good right?
The problem is, how are the employers going to pay for it? Oh yeah, an equal increase in prices. The result is that there is no increase in pay, since the cost of everything is going to be going up as well.
Sometimes, what seems like a good idea, is not.


Matt Singer said...

Yeah, and if we can agree that we should have taxes, why not have billion kajillion percent taxes?

I also live in the all-or-nothing mindset.

Steve said...

Okay, but I don't think that you can presume that we have to have taxes.
Anyway, your comment leads me to think that what is needed are not flat hourly rates, but shares of the profits.
Could also be the answer to the problem of outrageous CEO compensation packages. For instance, if your part of the final product is 1%, then you should earn 1% of the profits. Of course this will only work when there is positive cash flow. I don't think anyone would want to work at the job if the company is losing money.
I will have to think on this some more.

Trevor said...

100% agreement with the conclusions you've reached here.

Rocky Smith said...

All the liberals can FEEL GOOD about themselves if they get a minimum wage increase passed- even though it will not help in the long run. The resulting inflation would eat up the wage increase. Democrats could look like heroes though, so it's not a total loss- in their eyes.