Wednesday, February 1, 2012

Mitt's Minimum Wage

Mitt is going to be a disaster if he becomes President. In his statement regarding having automatic increases in the minimum wage tied to inflation we are again reminded that Mitt is a Northeast Republican. For a candidate pushing his business credentials as the reason to vote for him, he certainly is alienating those in the business of creating jobs. This proposal is absolutely wrong for business. This type of proposal is a job killer not a job creator.

Currently, the minimum wage is $7.25 per hour. Now we all know this is not a living wage, not even close. However, it is decent pay in fact rather generous for what amounts to unskilled burger flipping jobs in fast food. We are talking unskilled labor that most people that are employed by those markets are only there for extra spending cash. The people most hurt by increases in the minimum wage are the young adolescents. Jobs that are made for 16 and 17 year old young students for extra spending money have been taken away from them. The minimum wage is now high enough that young adults in their twenties will take for extra income in a household. Middle aged empty nesters will take that kind of job for something to do now the the kids have moved away. Businesses now having higher direct labor costs will look and hire the more mature young adults or empty nester over a young adolescent that is immature. So the young of robbed of opportunity. The young adolescent's are robbed of the ability to learn responsibility. Small businesses and family businesses will work longer hours and hire even less employees. Any way you look at the minimum wage, the only one's that benefit from higher minimum wage is labor unions and only because their labor rates are often tied to the minimum wage much like credit card interest rates are tied to the prime lending interest rate.

This proposal on minimum wage is anything but a job creator. It may sound good to the labor unions but it is bad for business. This recession started in DEC 2007, according to the experts. Of course this followed a hike in the minimum wage in Jul 2007. The 2007 law also mandated two more increases in 2008 and 2009. Look at our unemployment rate's and look at the problems we are having in the job market even today. The 2007 minimum wage increase has had a negative impact on employment and we are still feeling the effects two and a half years after the last increase.

The minimum wage is an inflation driver. Tying the minimum wage to inflation is like a self licking ice cream cone. As higher labor rate across the board go into effect due to an increase in the minimum wage inflation increases, as inflation increases so does the minimum wage. We need to stop thinking of the minimum wage as a wage for the poor or a living wage. Wages should be negotiated and not mandated. The market system will take care of the wages. If a business offers to little in wages there will be a higher turnover of employees and the business will become unstable. If wages are too high the business will become unprofitable and fail. By placing a minimum wage into effect the risk is it will become too high for businesses to remain competitive, increase inflationary pressures and kill responsibility providing jobs for the young adolescents. Mitt's idea on the minimum wage is not good for Republicans, not good businesses, and not good for the country. I can't believe this idea of the left is being paraded around by a Republican Presidential Nominee candidate.

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