By Wayne Dupree | December 30, 2019
What most people fail to understand is that the market cannot be defied or manipulated for any period of time. Economies are based upon value, not money, and the market determines the value of goods, services, and labor.
Merely raising the dollar cost of an hour of labor does not work. Money is nothing but a medium for exchanging the value of labor. The government can regulate the dollar cost of labor, but it cannot regulate the value. Think of money as a bucket used to carry the value of your labor. Raising the minimum wage is like giving workers bigger buckets, the only problem is that the amount of value inside does not change.
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When it comes to the effect of increasing minimum wages, we have decades of experience to go by. The effect is nothing because the value of unskilled labor is low, so when the dollar price of an hour of labor is raised, the dollar loses value relative to labor, goods, and services.
In plain English, a barista working in a Seattle coffee shop in 1983 when the minimum wage was $3.35 an hour enjoys the same standard of living as a Barista working in Seattle today earning $15 an hour. This is not rocket science, it is fundamental economics, but most Americans know as little about fundamental economics as they do rocket science.
The minimum wage is set to go up in 72 jurisdictions in 2020. The increases will be in 24 states and 48 cities and counties, according to the advocacy group National Employment Law Project.
Most of those changes are set to begin on the first day of 2020, though New York’s pay raise is set to begin Dec. 31, the NELP reported.
On New Year’s Day, 20 states and 26 cities and counties, mostly in California, will raise the minimum wages. Four more states and 23 more cities and counties will join later in the year, according to NELP.
“These increases will put much-needed money into the hands of the lowest-paid workers, many of whom struggle with high and ever-increasing costs of living,” wrote researcher and policy analyst Yannet Lathrop in a blog post announcing the new wages. [Fox6Now]
Small businesses run our economy, contrary to what many believe (that corporations do). This will have a negative impact on those areas with huge increases. Looking at the map, it’s understandable who will suffer and why.
I’m seeing more and more kiosks in fast food places, self check out in stores, etc. If employee costs become too high, the company will either cut back on employee hours along with raising prices or find alternatives to “live” employees. The minimum wage was NEVER meant to be a living wage. It’s a starting point in a working career. You’re supposed to improve your skills, education, etc. and move on up. Minimum wage is a beginner’s job, for teens, seniors — not meant to support a family on.
Among all developed countries, Switzerland has always rated at or near the top for the quality of living, but Switzerland does not, and has never had a minimum wage.
This piece originally appeared on WayneDupree.com and is used by permission.
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