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THE UPRISING OF THE AMERICAN PARTY "Clearly the voters are engaged right now, at least for sure on the republican side, and what they have concluded is that the republican party has not done their job. Thus, Donald Trump gets their vote."

Wednesday, October 28, 2015

Raising Wages Artificially Seriously Hurts Jobs—No One Gains

I am not sure if I remember exactly who first touted the $15 minimum wage, but the lawmakers sure have clung to that number with several cities in the US now implementing wage hikes. Bernie Sanders wants to be a champion for the middle class shouting in a Verizon picket line that "corporate America can't have it all." And Dan Price, a Seattle CEO of what was a successful company decided based on some pie-in-the-sky study of a "happiness factor" that his employees should make no less than $70k a year.

The truth is that all of these numbers, all of these promises, all of these demands, are simply done without any thought to who pays the cost ultimately of any of these types of decisions. When people shout out these talking points they are not considering facts such as how much money is really out there for the taking? What are the bottom lines of the companies? What do the balance sheets look like before and after an ultimate decision is made?

The end result, however, is clear. Loss of jobs essentially washing out any potential gain from increasing wages.

Less taxes will be collected, less wealth will be gained, and more doors of companies will be shuttered leaving behind it simply more ruin. Time and time again there are lawmakers and people in the voting public who simply do not understand the basics of economics, and the impact of arbitrarily pulling numbers out of their asses when it comes to what they believe everyone is entitled to. The way to boost the economy, and the way to boost people's wages ultimately is not simply by slapping a number down and saying "let's call it done." It is simply not how it works, and the proof is always in the pudding. People always suffer as a result of unintended consequences. Unfortunately these are the very people these decisions are designed to help.

I am not at all against people making more money. I say a company should pay their employees the most they can reasonably afford to pay. But it's not simply a matter of picking a number. It is a matter of looking at what is reasonable and it is a matter of hiking or paying wages that are conducive not only to the lifestyles of the employees, but to the continuity and profitability of the business as a whole. If people are laid off, if prices need to be raised, if benefits need to be reduced, this helps no one to accomplish the end goal of rising up the middle class and improving anyone's standard of living.

Just like in our own lives, creating artificial spending relief by adding credit cards to our wallet only prolongs the reality that we do not have the money to sustain what we want, a company cannot simply absorb demands without real money to satisfy them and have the expectation that this will somehow make-up for itself somewhere down the line.

When the bills come due, that is when reality sets in, and the smartest people in the crowd begin to realize you cannot create something out of thin air and expect it to work. Those who aren't the smartest in the crowd point to the greedy businesses and the rich as "screwing us over again."



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