The Real Results of raising the Minimum Wage to $15.00/ Hr.
As you are aware there is a nationwide movement to raise the minimum wage to $15.00 / hour. The rationale is people cannot afford to live on the current minimum wage that varies though out the country. For example, the Federal minimum wage is set at $7.25 / hour. Over half our states have minimum wages that exceed the federal rate. They range from $7.75 to over $10.00/ hr.
It is true no one can support themselves adequately or a family on minimum wages. What no one openly states is people working for minimum wage often get additional government assistance. Food Stamps, Housing allowances, Medicaid or WIC (Women, Infants and Children assistance) support.
Assume minimum wage to be $8.00/hour. A 40 hour week would get you $320 before any deductions. That is about $1280.00 monthly, $15,360 annually, again before any possible deductions. At 100 % poverty as long as a family of 4 does not exceed $1988 monthly, they would qualify for up to $649.00 monthly in Supplemental Nutritional Assistance Program, (SNAP or Food Stamps), all not taxable. In addition, they would qualify for Section 8 or HUD Housing allowances. This program allows poor people to rent apartments in “safe “neighborhoods. Basically, if your total family income is below $36,850 annually you could qualify. If you do, you would receive vouchers that would pay up to 70% of your rental costs in approved housing apartments. In addition, the Federal poverty level is currently $24,250 for a family of 4. That would fully qualify them for Medicaid. It is available through 133% of the poverty rate. What is their real annual salary when you add in SNAP and housing allowances, and Medical coverage?
A $15/ Hr. rate would raise their salary to $600 weekly, $2400 monthly and under $29,000 annually. Again, before deductions and based on a forty hour week. Would they be any better off as their benefits are reduced or even cut off? I know many could argue that would be a way to reduce entitlement costs and lower budgets. However, please consider what would happen on the business front.
Business would do several things if and when minimum wages get hiked up to $15.00 hourly. The obvious answer would be to pass on their increased costs to the consumers by raising prices. However, increased cost could and would result in a decrease in business purchases. Business would then try to lower their costs by reducing payroll. That means many of the minimum wages jobs would be eliminated where possible. In addition, larger corporations would look at alternatives to hiring minimum wage personnel. McDonalds Europe, for example, is purchasing 7,000 touch screen cashiers for their store throughout Europe. It will take your order and you may pay for it by credit or debit card. No Cash.
At $15.00 per hour to hire unskilled labor, how long before they make their way into our local McDonalds?
Technology already exists for a robotic burger flipping machine capable of making 360 burgers an hour without human assistance. It is capable of making custom orders and delivering a complete burger without any human assistance. At $15/ hr., how quickly does it become economically feasible to replace unskilled labor with automation? Machines that will do things quickly, are more sanitary, and do not require time off, benefits, nor complain about conditions.
The unintended consequence of this $15.00 minimum wages requirement will be to have many jobs disappear and more people on increased government assistance. The very opposite of the Liberals stated goals. Those few whose jobs remain will not benefit much economically as their taxes will go up, and government benefits decline. In addition, part time work for students and adults will also decline as costs increase for employment.
The Solution is simple, leave minimum wage alone or increase slightly for inflation. Instead educate people to the available training to increase their market skills in the work force. Then they will be able to get higher paying jobs and better support their families. The programs already exist and are often fully funded for students to take advantage of the training/education.