Minimum Wage Too Low?

Minimum Wage Too Low?

With our current economy, it is becoming harder and harder to make a living on just a single source of income. Living costs are steadily rising, and employee wages cannot keep up with them. This has fueled protests by fast food workers all across the nation, demanding a “living wage”, as they call it, set at 15 dollars an hour. What these fast food workers do not understand, however, is economics.

The basis of business relies upon supply and demand. This includes demand for not only products and services, but also for labor. Forcibly raising the price for labor will then result in a lack of demand, because companies have to balance their cost with their revenue. As a result, in order to maintain their profit margins, corporations will either downsize to balance or find alternatives to hiring employees, such as automated computer systems. The result? Rather than a small paycheck, the same people fighting for a higher minimum wage end up getting stuck with no job at all.

If the issue of corporations downsizing to avoid hiring expensive labor is somehow circumvented, there is still another facet that these disgruntled, low wage protestors are ignoring. While they focus solely on the figurative “Big guy” and his seemingly endless wealth, they have completely ignored small business owners. What about the mom and pop shop down the street that hires students part time for minimum wage? Small business owners have been struggling to survive against conglomerates for decades. Their profit margins are low, and exist solely to scrape together a living. Logically, small business owners should be on the same side as the protestors. Instead, they become an indirect enemy, not to mention collateral damage if the minimum wage really does hike.

If decreasing the job market and killing small business is not enough, how about price increases? Profit margins and prices are all carefully calculated for each business in order to achieve maximum efficiency. Can we honestly assume that companies will not increase prices if all minimum wage workers are expected to make $15 an hour? Imagine a world of $30 hamburgers and $15 milkshakes at IN-N-OUT. The consequences of all this mayhem would be corporations having to pay their employees even more to match the price hike, and the government having to inflate the currency even further to match the lack of money in circulation.

So, with that, what is the end result of raising the minimum wage to what low income workers call a “living wage”? It’s quite simple actually. When equilibrium is broken, it rebalances itself. Raising the minimum wage to $15 will raise the cost of living for everyone, and then we’ll all be back at the status quo, with lower income workers struggling and conglomerates staying rich, albeit now with a number that has been shifted up. $15 an hour will no longer be enough to live on, and then there will be more protests to raise it yet again, only to yield the same exact result.

To be blunt, the situation of the minimum wage could be thought of as a basic statistics problem. If one places our population on a bell curve, you can see that the bulk of people are in the middle, some on top, and some on bottom. In order to maintain the balance of that curve, there MUST be people on the bottom. There is no such thing as a world where there is no struggling low class, just as there is no such thing as an all C or better class in a university class. Rewards come with achievement, not complaint. Perhaps if they want to have life a little easier, they should consider throwing away their complacency and start thinking about how they can work for a better future. In our world, opportunities are everywhere. Companies scattered all over the Greater Los Angeles area are offering contracted jobs; there is even a company called Mobile Wash that will go out of their way to LEASE vans and equipment out to aspiring mobile car detailers on a small daily fee, just to help them survive as an independent contractor. Really, with opportunities like this everywhere, is there really an excuse to sit at a minimum wage job and complain about the rates? The answer is no.