Tag: minimum wage

The House Minimum Wage Raise Bill Will Be a Disaster

Nicolas Gonzalez@Nicogonz15

On July 18th, 2019, the House of Representatives passed a bill which will raise the federal minimum wage to $15 per hour.

Rep. Adam Schiff, Twitter (D-CA-28).

Schiff claims that 33 million Americans will receive a well-deserved raise, however, it will only take jobs off the market and make that 33 million downsize significantly.

Continue reading “The House Minimum Wage Raise Bill Will Be a Disaster”

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Raising the Minimum Wage Will Harm Workers and the Economy

By Othman Mekhloufi | United States

Left-wing and Keynesian economics have overwhelmingly called for an artificial raising of the minimum wage. This has been due to the belief that all workers must be paid a living wage regardless of their line of work or skill set. Essentially, this is a belief that it is unfair to not compensate workers with a living wage. However, to require employers to compensate their workers with higher wages will only play to the disadvantage of said workers through the inflation of prices, unemployment, as well as the cutting of work hours. Hence, resulting in a worse off economy for all individuals, and simply an unpragmatic economic policy.

The minimum wage is the legislated minimum amount of money an employee may be legally paid for their work. This minimum wage, whatever it may be, is not necessarily a living wage, but rather a wage paid for jobs which require a minimum amount of skills. For instance, if a worker were to create more than twenty dollars an hour for their employer, they would be compensated for twenty dollars an hour, or less. In essence, workers are paid according to how much they produce, and how much is possible to pay them. Such a method of compensation allows businesses to remain financially afloat by being able to make money at all, and, in turn, pay off expenses.

As a general rule, it is positive for all individuals for a business of any size to remain afloat. When businesses are present in the economy, it allows for a product and/or service to be provided to the consumer end of the market. In addition to this, jobs are created with the existence of the business, as well as its future expansion. 

However, when the minimum wage is artificially raised by the government, employers will be legally required to compensate some of their employees for possibly more than they initially produce.

Considering small businesses, this will result in one of two major negative economic repercussions. The first of which is work hours getting cut and employees getting laid off, resulting in the business most likely ceasing operations. The second impact is inflated prices, resulting in individuals, as well as the economy, being harmed. 

When small businesses must compensate their employees for more than they initially produce, compensation is rendered financially impossible. As a result, small businesses will be effectively forced to lay off employees, causing unemployment.

Having to lay off many employees, small businesses will be unable to continue their production, resulting in businesses being forced to cease operations. Considering the fact that small businesses are not as large-scaled as others such as McDonald’s, automation to replace workers would not be a viable option as it would be unaffordable.

Through causing small businesses across the board to cease operations, unemployment is bound to be brought upon the economy. In addition, the product and/or service that the business initially provided to the consumers would be brought off the market causing additional burden to customers who relied on said product and/or service.

For example, if a small business has workers that produce thirteen dollars for each hour of work, but compensates said employees seven dollars and twenty-five cents an hour, it would allow for the small business to rake in five dollars and seventy-five cents per work hour after paying employees. These five dollars and seventy-five cents would be used to pay other expenses, make a profit, as well as generally stay financially afloat. However, when the government is to raise the minimum wage to fifteen dollars an hour, the small business would be forced to pay employees two dollars more than they initially produce. In turn, the business would begin to lose two dollars for every work hour, as well as experience a total absence of income. In light of having no income, and losing two dollars an hour to compensate said employees, and to remain financially afloat would be impossible. Such would result in the small business having to lay off said workers.

In this case, automation would not be a viable option for said small business as it would be unaffordable. In the case where it would be affordable, said business would not be small, but rather one of larger scale.

Due to being unable to automate, and having a lack of labor, the small business would be unable to produce the product, and/or service which was initially produced. In result of such, the said small business would be forced to cease operations.

To avoid laying workers off and, in turn, ceasing operations, small businesses have the option to raise prices to remain financially afloat. However, this option is in itself still a negative economic repercussion for both the consumer, and the business. If businesses are to raise prices, many customers would be driven to competitors who offer a cheaper price, or would simply cease purchasing said product and/or service as a whole. In turn of such, businesses would begin to lose out on income, and the customers who remain would be financially burdened with higher prices.

Such economic repercussions are not limited to small businesses as the same has occurred with Starbucks in 2018. Starbucks had announced that it would be closing roughly three times as many stores in 2019 than it usually would in a year. The closures of these Starbucks locations will be focused in densely populated and urban areas on the west coast, as well as in the northeast where the minimum wage is particularly high. Starbucks CEO, Kevin Johnson, had stated that the affected stores are “in major metro areas where increases in wage and occupancy, and other requirements are things that were making those stores unprofitable.”

In the case of larger scaled businesses and corporations who would not go out of business due to an increase in the legislated minimum wage, negative economic repercussions would continue to take place.

When the minimum wage is artificially increased by the government, businesses that are able to stay financially afloat while paying their workers more will experience income loss nonetheless. Businesses, in all cases, will want to mediate income loss to the greatest possible extent for furthermore profit. To deter such income loss through spending less money, said businesses will cut work hours, lay workers off, as well as raise the prices for their services, and/or products.

Inflation of prices would drive customers to competitors, as well as cause the business to lose out on income as a whole. Because of this, price inflation is an unlikely method to combat a loss of income for larger scaled businesses as they can afford other means to do so. Most prominent of these other mechanisms to cut income loss is to cut work hours, as well as lay off employees.

This was seen in an estimation made by the Bank of Canada stating that over sixty-thousand jobs will be lost by the year 2019 due to minimum wage hikes; along with a study conducted by the University of Washington which had observed that after Seattle’s minimum wage hike from $9.47 to $11.50 an hour, there had been only a one percent decrease in low wages.

When workers are laid off to mediate income loss, they must yet again be replaced by an entity to continue doing the necessary work the business requires. In response to such, automation of labor comes into play. We witness this in today’s world as McDonald’s has announced that they will be replacing cashiers with automated kiosks in all 14,000 of its U.S. locations as of 2020In addition, McDonald’s had announced that it was prioritizing such automation in locations with prominently high minimum wages such as Seattle, and New York City.

After nineteen of the American states had announced a minimum wage increase to ten dollars an hour in January of 2017, a month later in February, the CEO of Wendy’s had announced financial shifts within the company. Wendy’s CEO had announced a four percent rise in wages, along with an eight percent loss in margin. In turn of this, although not confirmed, but evidently understood with the previously explained economic theory, Wendy’s had announced a plan to install automated kiosks sixteen percent of its locations; a cheaper alternative to conforming to the minimum wage hikes and paying workers more. 

With all economic theory, and evidentiary claims considered, it can be understood that artificial hikes of the minimum wage will indeed result in unemployment, cutting of work hours, shutting down of small businesses, as well as the inflation of prices; all resulting in a furthermore disadvantaged financial situation for workers, the individual, as well as the entirety of the economy itself. Therefore, inherently proving that a hike in the minimum wage would be detrimental, and counterproductive to the goal of left-wing, and Keynesian economics.


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Minimum Wage Raises Are Causing Price Hikes – Just As Expected

By Mason Mohon | @mohonofficial

For us it’s very simple. There’s no big pot of money out there to get the money out of.

That was the statement of Mike Wiggins, owner of Granny Schaffer’s restaurant in Joplin, Missouri. He is being forced to raise the prices of food items up to 20 cents for one reason: the minimum wage increase.

Continue reading “Minimum Wage Raises Are Causing Price Hikes – Just As Expected”

A Response to a Socialist

Joshua D. Glawson | United States

Recently, I wrote a short article critiquing Socialism and Communism. In the response section, a person responded with the following statements (errors are theirs):

“This has a few errors. Capitalism is a hypocritical ideology in its core, if everything is given to the free market, so not everyone can get an education this destroys the argument of “Eh, if you weren’t good in school, you wont be good in the future”. Your point comes about the “more wealth the rich have the better” is wrong, and misleading. There needs to be government interference for this to happen with the social programs that you hate distributing the wealth. Other wise the rich will hoard money with no restrictions and pay less to their employees since there is no interest in supporting the workers. Infact the word you support has been tried out before, in the 1800s, with massive industrial bosses monopolising industry, using child labor and abusing their power, this stems from the fact that the government didnt wish to interefere into the free market. A completely free market will unavoidably colapse into either a monoply or something else. You will also probably refuse to admit that some of the most succesful countries are once with high taxes and societies with not much economic freedom, yet the majority lives well. Compare the average life of a city dweller in the US and Norway, one has to constantly think about his medical insurance bills and if he will have enough capital to pay for his rent, while the other has a more bright life.”

I decided to take the liberty- pun intended- to respond to the typical Socialist reply, and I believe it may help you in your future debates with Statists, Socialists, and Communists. My reply is as follows: 

First, understanding what Capitalism is what it is not is imperative for discussion. Capitalism, as I am describing it, is the free and voluntary exchange of goods and services, i.e. Laissez Faire Capitalism.

The free market does, in fact, solve the establishment of education and can provide it at a reasonable price, as the competition of the marketplace is what drives up sales and profits. E.g. the oldest schools in the US are still some of the top schools in the world and were started by private and/or religious organizations. There are also several developing organizations providing free private education in the US: Free Schools | PrivateSchoolReview.com , Private School May Be Free If You Make Less Than $75,000 | PrivateSchoolReview.com , 8 Colleges Where Students Attend For Free, etc.

Additionally, when a government is coercing people to attend school, it forces education to lose its ‘value.’ A high school diploma means little-to-nothing anymore in the US because so many people have them. This has become such an issue that most employers do not actually check if someone actually has a high school diploma when they check yes in the degree box. Another important principle is that if something “good” is being forced on people, or people are being coerced to do, the good that is done is negated because something done well requires free and voluntary action, not coercion.

Laissez Faire Capitalism has NOT been tried in the US, and I am sad to say that it has not been fully implemented in any country-wide economy. What has been tried is near-Capitalism, where there are mixed economies and approaches to attempt more market freedom. What we do know is that the closer we are allowed to move towards Capitalism, the better off the majority of people are, and in the long run everyone is better off.

Monopolies come in four main categories, not just one. There are geographic monopolies, where simply due to their location almost everyone purchases from the supplier; technological monopolies are where an organization excels in technological advancements when compared to their competitors, and this gives them the  edge for monopolizing the marketplace; natural monopolies are completely free and voluntary, there just are not any direct competitors yet in the market; lastly, government monopolies are coercive powers that only exist because of government influences and protection by government with the threat of fines, prison, garnishments, removal of property, and up to death for those that dare to compete against the coercive monopoly assisted by government. This is important to distinguish, because Laissez Faire Capitalism, in its very philosophy, does not allow coercion as that is the antithesis of Justice. Furthermore, government, itself, is a coercive monopoly as it has monopolized the initiation of force and coercion.

Socialism and Communism are contradictory to Justice as they pontificate that free and voluntary exchanges between people cannot be conducted, i.e. via Laissez Faire Capitalism, while a select few of the political elite who run the Marxist government institution determines who the winners and losers are through arbitrary means. These same people will say in one sentence that [coercive] monopolies are bad, and then turn around and say government should control the marketplace. That is, by its definition, a coercive monopoly.

In response to your pointing out of child labor in the US, please note that it is a “privilege” for children to not work hard labor, not a moral stance. The nature of mankind, when born in nature, is without clothing, with little food primarily from one’s mother (hopefully), with no shelter except that of the voluntary guardian (hopefully), no weapons, inability to walk or talk, etc. We are born helpless, and our state at birth is that of extreme poverty. The US, and other European countries, moved towards not having children in the labor force for multiple reasons. One, because it was not financially necessary for everyone to have their children working because they had better-paying jobs that enabled them, primarily men, to provide for their families’ needs and some desires. Two, many of the labor laws against child labor were directed towards Blacks and other low socioeconomic minorities within the US to prevent them from gaining political and financial leverage in the US. Three, social pressure from those in society were disappointed in seeing that the significant primary provider of child labor was not the private marketplace, but in fact, government sending orphans to work in factories in order to fund their housing, staff pay, food, clothing, etc. especially for the orphans themselves. Today, there are still a number of countries that have child laborers, but they are mostly in developing countries, which points back to my original premise of the “privilege” of not needing child laborers.

As for your erroneous comparison of the US to Norway, let’s take a look at a few facts first. I will begin by stating it is very difficult and fallacious to compare these two countries. Also, there are, of course, major limitations in Norway that come along with having a major Welfare State: The Nordic Glass Ceiling . Nevertheless, Norway has an almost similar economic freedom as the US. Norway’s financial success comes mostly from the private market sells of oil. Norway’s population consists of a homogeneous society with similar ideas, views, and philosophy; whereas the US is far more diverse, and the US has a higher per capita GDP. The enjoyment of life in the US is far greater, overall, than in Norway. Additionally, Norway does not have the utopian system that you seem to be alluding to. The heterogeneous character of the US is what helps it drive forward in the world, providing a superior and diverse competitive market, especially when compared to Norway. This also prevents a true cross-comparison of the two countries, as they are not even similar- it is a false equivalence logical fallacy.


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Josh Hawley’s Wage Plan will Cripple the Working Class

By Ryan Lau | @agorisms

The 2018 mid-term season is in full swing, and Missouri’s senate race is heating up. Republican attorney general Josh Hawley defeated Austin Petersen, among others, in the August 7th primary. Since then, he has been in a tight battle with incumbent Democrat Claire McCaskill.

Too Close to Call, so Far

Recent polling suggests that the race is one of the closest in the country. Real Clear Politics lists a number of polls between the two, in which Hawley recently averages a slim 0.6 point lead. This, of course, is well within the standard margin of error, which is between two and five points. RCP also ranks Missouri’s race as one of only nine toss-ups in the country.

Given this knowledge, it is unsurprising that Hawley is seeking out ways to distinguish himself from McCaskill. However, he is quite unwise in the means that he selects. This Monday, the attorney announced his intents to create a bill that, if passed, would effectively become the second largest minimum wage increase in United States history.

The “Work Credit” Minimum Wage Hike

Interestingly, Hawley is not directly calling for an increase in the federal minimum wage. Instead, he desires a “work credit” for all those making less than the median wage. Specifically, the credit would take their wages and bring them 50% closer to the median. The very nature of this plan is a disaster waiting to happen.

As of May 2017, the median wage was $18.12 for hourly workers in America. In the same year, 80.4 million workers were earning an hourly wage, which amounts to a little bit under three-fifths of the total working population. Of these workers, only about 542,000 were earning the minimum wage itself.

That was How Much Again?

At the current $7.25 federal minimum wage, a worker would be compensated with an amount that brings them halfway to the median. In this case, they would receive a total paycheck of $12.69, where $7.25 comes from the employer, and the other $5.44 comes from the state. This means that in occupations without tips or other compensations, the lowest anyone could possibly legally receive is $12.69 for an hour of work. This is a 75% increase in the overall minimum wage. The only time that the government raised it by a greater percent was from $0.40 to $0.75 an hour (87.5%) in 1950, following the negative inflationary effects of high amounts of war spending.

If the median wage was $18.12, then it would necessarily follow that 40.2 million workers earned less than that amount, or that amount exactly. For the sake of simplicity, let us assume that the proportion of workers at all levels, from $7.25 all the way up to the median of $18.12, is equal. Of course, this is not going to be exact and may vary in one in direction or the other. Yet, the failure to estimate here would yield a calculation that is hundreds of pages long and nearly impossible to finish, as it would then have to account for every specific worker in the United States.

The Economic Burden

A simple average suggests that the typical wage worker in the bottom half makes about $12.69 an hour. Again, some variation may exist, but such variations are nearly impossible to find precisely. Hawley’s plan would take this wage and bring it halfway to the median. So, a bottom-half worker making an average of $12.69 would see a bonus of $2.71 per hour. This means that the worker’s total average earning will amount to $15.40 an hour: $12.69 from the employer, and $2.71 from the government.

Now, $2.71 may seem like a pretty small number, and on the face, it is. However, this number is not a one-time payment and must go out, under Hawley’s plan, to every worker in the country making less than the median. Some, depending on where they fell, would get more of a bonus, and some would get less of a bonus. But just how much of a burden would this be on the American people, including the lower-class workers?

Given a 40 hour work week, and 50 weeks worked per year, the numbers are staggering. In a single day, each of these workers would receive a check for, on average, $21.68 per day. In a week, the number increases to $108.40, and in a year the costs to pay a single worker would average out to $5,240.

A Massive Expenditure

Multiplying the figure times the number of workers earning below the median wage reveals the sheer horror of the plan. With 40.2 million workers receiving an average of this amount, Hawley would create an additional $217.8 billion in expenditures. This is equal to an immediate 5.3% increase in federal spending and would add over $2 trillion in debt in two years. The program is over four times more expensive than Trump’s massive military spending increase in the 2018 budget. It also happens to be more than the military spending of China and Russia combined in 2017.

Money Isn’t Free, Mr. Hawley

Hawley risks serious economic problems if he continues to add more to the national debt. Though the Republican Party has long since abandoned fiscal conservatism with few exceptions, this idea threatens the very nature of fiscal conservatism as a whole. It is entirely possible that rather than increasing the national debt, Hawley may instead propose to increase taxes. If he balances the plan, then he would need to raise $217.8 billion dollars annually. However, the money does not come from thin air, though the U.S. Treasury may suggest otherwise.

Currently, there are 138.1 million active workers in the United States. Most likely, they would bear the brunt of this fiscal burden. If divided equally, them each taxpayer, including the lower income earners, would owe $1,577 at the end of the year. So, of their great gift, the working poor would instantly pay 30% to the state.

This, of course, is a bare minimum. Realistically, that rate would be much higher, because the government does not operate at 100% efficiency. To collect, manage, and distribute the money, they would need to collect, manage, and distribute even more. Government efficiency is low, and even at two-thirds efficiency, that rate increases to 40% from 30%. This tax rate on their bonus is actually much higher than what they already pay on their current incomes, which varies from 10 to 12 percent.

May it be Even More Dangerous?

Moreover, it is unclear whether Hawley supports this idea for salaried workers. In his op-ed, he merely states that all workers below the median should get a significant pay raise. If Hawley implemented the same thing for salaried workers, who generally earn more money per year, he would be facing an even greater economic crisis. As the debt counter reaches for the sky, more debt is not the answer.

Unfortunately, this is not where Hawley’s ineptitude stops. Last week, he actually said that not only should below-median workers see pay raises, but every worker in America. Though he emphasized helping the poor, he did not exclude a single American worker. If he follows through on this, then the state will be handing checks to millionaires. It is immoral and coercive to tax the country to aid the poor. But it is morbidly wrong to tax the country to aid the rich.

Though Hawley fails to state where this money will come from, the options are increased taxes or increased debt. The country can currently afford neither, as debt shoots past 75% of GDP. Hawley’s plan will take an already volatile economy and make it much worse.

Taking, Giving, and Taking Again

Rather than increasing taxes more, Hawley should be focusing on why the people are poor in the first place. The fact of the matter is, minimum wage workers are not taking home $7.25 an hour. Subject to a 12% tax rate if they work full time, that figure drops to $6.38. Hawley identifies the problem that the poor do not have enough money to live comfortably. Where he fails is the solution. When the government is taking money from the people, the solution is not to give the people money back, just to take another 30% of it.

Let’s look at some of the numbers again, with the same $12.69. In the 12 percent income tax bracket, that average worker only takes home $11.26 while the government collects $1.43. They then see a bonus of $2.71 come their way in the form of Hawley’s plan. But, in the end, the government needs to take 30% of it to cover the costs. As a result, the worker hands over another $0.81 in income tax hikes.

This, of course, does not factor in the efficiency, so there goes another $0.27. All in all, that’s $1.08 gone from the $2.71. And, they already lost $1.43 from the initial income tax. Altogether, the state would take $2.51 from the average worker per hour, just to give them back $2.71 an hour and call it an act of generosity. I hate to break it to you, Hawley, but a net of $0.20 per hour is not an act of generosity, nor is it even a significant figure.

A Great Big Immorality

It is wrong to take money from individuals for any purpose. However, even when you ignore this moral principle, a scathing immorality remains. This program would, if it was lucky, give a tiny bit more than the government would need to take. The complex system of giving and taking only makes life harder for Americans on tax day and grocery day, too.

Of all tax and wage ideas out there, this is perhaps one of the worst. It expands government massively, so much that they would likely need a new agency to administer the program. At the very least, it would swell the Department of Labor’s budget. In either sense, it is unfit to exist. Taking money from the people, wasting it, and giving about the same amount back is not unlike breaking your neighbor’s arm, and then paying his medical bills and sending him a batch of cookies while you caringly help him recover. No amount of alleged kindness can take away from this great wrongdoing.

A Proposal for Prosperity

Thankfully for working-class America, there exist a number of much more successful plans to put more money in their pockets. But sadly for working-class America, few politicians, least of all Hawley, are talking about it. Ultimately, though, one point sticks out in particular as a method of surefire success.

It is time to at once abolish the income tax on poor Americans. Just as a cigarette tax is a deterrent to smoking, an income tax is a deterrent to working. When those who struggle so much to get by cannot keep what they earn, it makes survival and comfort both that much harder. If lower-half Americans had that average of $1.43 an hour back in their pockets, they would have much more social mobility. With an extra $2,860 a year at a forty-hour week, the possibilities are endless.

By freeing up that extra income, these individuals can begin to buy things that are lower on their priority lists but still very important. For example, there may no longer be a decision between hot water and a child’s birthday present, or healthy food and a good education. If a family budgets well and has all of these, maybe they can start to save, and truly move up the economic ladder for the first time.

Manageable Economic Costs

Of course, when taxes decrease, spending must also decrease in order to balance the program out. Unlike Hawley’s plan, however, this one has a real solution in order to create balance. By eliminating the income tax for those earning less than the median hourly wage, the government would lose $115 billion in annual revenue. But this is only slightly over half of the burden of Hawley’s plan. And, it gives working-class Americans an average of over seven times more additional money than Hawley’s ($1.43 vs $0.20).

Hawley, in his editorial, does not in any way suggest how he plans to pay for the program. This plan, however, accompanies necessary and easy cuts in federal spending. In a 2017 report, Senator James Lankford asserted that the federal government wasted $473 billion that year. Surely, different members of the Senate would contest that some of the spendings were necessary, or at the very least, not known at the time to be an eventual waste.

Common Sense Budget Cuts

Waste spending will always exist. However, eliminating just 10% of this waste covers $47.3 billion of the total costs. Removing the unnecessary $52 billion increase in military spending yields $99.3 billion saved. Further, it is feasible to remove the $4.4 billion increase to the Department of Veterans’ Affairs and $2.8 billion increase to the Department of Homeland Security, as well as eliminate the TSA’s entire $7.6 billion dollar budget within the DHS’s remaining funds.

This totals $114.1 billion, which is only $900 million short of the cost of removing the working class income tax. The remaining money, naturally, comes from the Internal Revenue Service. Considering they are handling almost 30% fewer clients, they surely could survive after a less than 10% budget cut. Taking away just $1 billion of their $11.5 billion in expenditures yields a net savings of $100 million. At the same time, working-class Americans will be saving money. By eliminating more waste, that positive figure can reach even higher.

American Fiscal Success is at Stake

Without a doubt, Josh Hawley’s plan is destined to grow government while hurting the working class. Moreover, it may even give taxpayer money directly to the wealthy, based on one statement. At the very least, it cripples the working class and then acts as a gift.

Eliminating the income tax for these Americans, however, keeps their money in their pockets. It boosts the economy, as they will have more disposable income. It also gives them seven times more than the work credit plan. Surely, American fiscal success rests on the backs of the workers, and it is time to stop crippling them and start allowing them to reach never-before-seen levels of success.


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