There’s been much discussion in the news recently regarding the minimum wage, currently $7.25, and the efforts to raise it to a level which would at least keep pace with inflation. You’ll hear nonsense that if the minimum wage is raised, jobs will be lost. After all, if you raise the cost of something, the demand goes down, right? Even if this were true, it’s rhetoric with no data behind it. There’s more to supply and demand than the simple result of ‘less.’ That something is called elasticity of demand. Simply put, if you raise the price of an item by 1%, you look to see how much the demand goes down. If it goes down a very tiny amount the relationship is considered inelastic.
What’s interesting to note is that this experiment has already been performed for us, by states that raised their minimum wage above the federal minimum. Data accumulated, graphs made, truth exposed. Stores have already cut back on employees. Ever go into a Home Depot where there’s one clerk monitoring 4 self check registers? Or the local supermarket that has multiple self-check lanes, and a few full-service? Will an increase of 39% from $7.25 to $10.10, the current democrat goal, have zero impact on jobs? No, probably not. But the loss in jobs is likely to be quite small compared to the positive effect on the millions working at minimum wage.
The next issue is that trickle down economics doesn’t work. Corporations are sitting on over $2Trillion and for various reasons, still aren’t hiring or repatriating this money to the US. On the other hand, the extra $5700 this wage bump would give to the minimum-wager will be spent almost immediately. An immediate boost to the economy. There are nonsensical arguments out there such as, “if $10 is good, why not raise the wage to $25, or a $50K salary?” These arguments are red herrings, and should be called out as such. At the start of this past holiday season, I heard the National Retail Federation CEO Matthew Shay say,”Since most of 2M min wage workers are young, it’s ‘more like a starting wage.'” Sir, you are out of touch with reality. Granted, slightly more than half are 16-24 years old, but this leaves the other half, adults that are trying to making a living on this wage. What I don’t see in the mix is a discussion of a lower wage for those under 25. It would make sense for the teen and students to stay at the current wage and would dismiss the notion that minimum wage earners aren’t those who are supporting themselves and their families. I offer such a proposal as compromise, not a position I’d otherwise push.
Now, let’s get to the punchline, the true transfer of wealth. It’s simply a matter of following the money. Wal-Mart has long history of establishing stores in neighborhoods and driving out the local stores. No wonder when Walmart submits a permit for a new location, there’s nearly always pushback and protests if the permit is approved. Given the low wages, their employees are typically reliant on some type of public assistance programs to help make ends meet. This assistance doesn’t come from thin air, it’s from the taxes that you and I are paying. You see where this is going? Our tax dollars are directly subsidizing Wal-Mart shareholders, more than half of which are members of the Walton family. The data shows that Wal-Mart’s net earning were $17.2B this past year. I wonder how much of this can directly trace itself to the subsidies its employees received. Yes, it’s time to raise the minimum wage, not as a means of redistributing wealth, just the opposite, as a way of stopping our collective wealth from going to this one family.