OK. I am an economics moron, I admit. But I believe common sense is all that's necessary to determine whether raising the minimum raise in this country is a bad idea.
I know there have been many books published explaining the pro's and con's of minimum wage increases, and they have been written by economists with all kinds of college degrees and experiences in business and money management.
For me, trying to read and comprehend all those books and articles gives me a headache.
Interestingly enough, there seem to be as many economists against the minimum wage increases as there are for them.
It's all a matter of perspective, I suppose.
I am not an economist, and my math may be flawed, but here is some raw figures I have been working with to try to explain why I believe minimum wage causes inflation, and consequently, unemployment:
Working with round figures, let's say a small businessman makes and sells widgets at a cost of $1.00 a piece. At a 2.5% markup, the widgets sell for $1.02.5 a piece.
Consider that his 10 employees make a minimum wage of $5.00 an hour.
The manufacturer has to sell 10,000 widgets to make a measly $500.00 a week to meet his overhead expenses and feed his family, etc.
Now, suppose the government comes along and forces him to raise his employees salaries by $1.00 an hour. That's $400.00 a week more than he has been paying them. That leaves him with $100.00 a week to pay his overhead and feed his family.
That is if he doesn't raise the price on his widgets, of course. So, what will our fictitious manufacturer have to do to keep his family from starving?
Well, he has some choices:
1. He can sell about double the number of widgets than he did previously, but that is unlikely. If he could sell that many more he would have already been doing so.
2. He can raise the prices on his widgets, which could possibly cause some of his previous widget customers, (if not all) to look elsewhere for their widgets, or possibly just make them unaffordable to his lower wage customers, you know, the ones that have just had their wages raised so they can afford more.
If he loses customers, he will then have to raise the prices again to compensate for the loss in income, therefore making his widgets even more unaffordable than before.
3. He can lay off 1 worker and drop another employee to part time to lower his labor costs. That way he can avoid raising his prices but he will suffer a loss of production.
80% of his employees now make $40.00 a week more than they did, but one of them is now making nothing, and one of them is only making $120.00 a week.
Now more than 10% of his workforce has lost income!
Well, it looks like raising the minimum wage causes our widget manufacturer to raise prices and/or lay off employees!
That's inflation and higher unemployment.
Now multiply that scenario as many times as the number of small businesses there are in America and presto! We have inflation and unemployment problems!
I may not be an economist but I have common sense, and apparently the Democrats in the legislature don't. Or maybe they do but just don't care that minimum wage increases will hurt small business, and, consequently, the very people they claim they are helping.
The poor and middle class.