Fifteen Bucks an Hour–Now!

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Economics is not politics and shouldn’t be treated as such. But then, neither is healthcare, but we’ve managed to polarize them both into political prolate pinballs on a helter-skelter journey.

Businesses do not lay off workers or restrict hiring when goods cost more. Businesses downsize only when customers are not knocking on the door. When demand for products is high, employment and production go up. When demand slacks off, employment goes down regardless of business costs.

In 1961 Joseph Heller published Catch-22 a satirical and absurd novel set during World War II. The title emerged from the story and into common usage as the reason for a problem being unsolvable due to a condition within the problem itself. Specifically–pilots may not be excused from flying bombing missions due to insanity because to request such relief in and of itself proves one’s sound mental health.

Supply side economists force an unnecessary Catch-22-like conundrum. The theory suggests that taxes and regulations be cut and lucrative incentives be given to big business. Those monetary gains will then trickle down creating jobs and the economy will flourish. President George H. W. Bush rightly called it “Voodoo economics.” Big businesses create record profits due to government actions, whether they sell anything or not. But, they will not hire and expand. Instead, they keep the money because demand remains low.

If the economy is sluggish, big business, even if they are receiving record profits to line the coffers, will be queasy about hiring and expanding due to the–wait for it–sluggish economy. As sure as a two-ton bag of flour making a big biscuit, a Catch-22.

Here’s another look from a different angle. “Sesame Street” occasionally airs a segment of the show called, “Which one is not like the others?” They will show an apple, an orange, and a carrot. Which one is not like the others?

In economics, the three posers are: personal debt, small business debt, and national debt. National debt is not like the others because it is a shared debt, much of which is owed to ourselves. The government will not go out of business just because of debt. Both small businesses and individual families will.

When business is unwilling to spend money the government must. That is the function of government in a capitalistic society–do what business cannot or will not.

Due to sheer numbers, the people who buy most of the stuff are the middle and lower classes. They spend 100 percent of their earned income to survive. Supply side economics doesn’t create demand because the jobs haven’t “trickled down” yet, ergo, no money to spend resulting in keeping demand low.

This iteration of a Catch-22 is avoidable by simply eliminating the middleman. Don’t give the money to the already rich and wait for it to percolate–get the money directly into the hands of the two economic entities whose debts are like one another. Get money into the hands of common citizens and small businesses in any manner possible–first as welfare to kick-start the economy and then by business paying workers a living wage.

At low minimum wages, workers cannot rise above the poverty level and cannot take advantage of a night out on the town, a newer car, or even a video game. Demand stays low and welfare high. This means that business taxes are going back to their own workers as welfare–in effect keeping their workers poor, but giving them an ort through welfare tax payments. Why not just pay them in the first place? More importantly, it isn’t just corporate taxes paying for welfare. Individual taxes are going to the same place.

We-the-people are subsidizing the workforce of minimum wage businesses that are already mega profitable.

If companies paid a decent wage–in the vernacular of Bernie Sanders when donning his aw shucks persona, “fifteen bucks an hour”– that would allow workers to rise above poverty, go off welfare, and spend those bucks on “stuff” creating more demand and more jobs. Then the taxes formerly used for welfare could be used to improve infrastructure, creating even more jobs and even higher demand for business’s products resulting in a humming national economy.

Hillary Clinton’s suggestion of incremental steps, first moving to a minimum of $12 per hour before jumping to $15 is a good compromise for business. But, I fear we have dawdled too long on this issue and we need to take a Bernie Sanders-type action and do it now.

 

 

Comments

  1. Reality check says:

    Dude- Mcdonalds or other places like that were never meant to be a career
    It was meant to be a high school or college job.
    What is happening now is a reflection of our education system and the lazy people out there looking for a free handout.
    WE THE PEOPLE- are sick of paying for lazy ,low life cockroaches looking for a free handout or refusing to better themselves or there lifestyle.
    Mcdonalds is now putting kiosks in to take your order and then have a few people behind the counter hand you your order. The kiosks will probably give you better service ,getting your orders correct ,and giving the correct change, over the punkass
    clowns working there now that cannot even read,write or make correct change.
    AND THE KIOSKS SPEAK ENGLISH- lol

  2. Excellent column Terry. The voodoo economics didn’t work then, and it hasn’t worked ever since. The majority of people with more money to spend create demand! In my experience however, about half of the “we the people” simply have no understanding of macro-economics and thus they DO think that the budget of the United States is just like their household budget. As you correctly point out, they are VERY different…and different principles apply. I don’t expect everyone to get an education in the different theories of economics, but understanding and knowledge of the basic facts is necessary for good decisions to be made. Unfortunately we have one political party that panders to those who think everything ought to be simple and easy to understand. I know, I know, i will be called en elitist if I say that the smartest and most knowledgeable should be making policy, but I am much more comfortable with smart, educated people making economic policies than people who just think it is all simple – it is NOT! A significant increase in the minimum wage would grow the economy, as it has EVERY TIME it has happened. When members of our society characterize others who they don’t even know as being lazy people looking for a handout and refer to them as “punkass clowns” and freeloaders they just show their ignorance. The real freeloaders are companies like McDonalds and WalMart (and many others) who make record profits and then pay their employees so little that the rest of society has to provide them with food and necessities – THOSE are the real welfare queens!~

    • Rick Crain says:

      John,
      It’s people like you who don’t have a clue. Mc Donalds as a corporation may make a lot of money but it’s not directly from the consumer. Mc Donalds are in most part small family businesses just making a living. By raising the minimum wage to $15. an hour won’t hurt the corporation but will hurt the local owners and may mean cutting back on personnel. I agree with you about Walmart because all Walmarts are corporate owned and can probably afford giving their employees that large of a wage, but they too may cut back on personnel. The customer service at most Walmarts really suck and cutting back on personnel isn’t going to help that situation.

      • johninnv says:

        HMMMM Rick – . About 20% of McDonalds are Corp owned, The 80% that you call “small family businesses” are actually quite well-off “families” because it takes well over $1 Million to buy/open one and average EBITDA per store is approximately $276,000/yr for the non-working owner. McDonalds Corp makes approx $250,000/yr net royalties per store. If the franchise owner and the Corp each took $80,000/yr less in PROFIT, they could pay every employee $5 more per hour and still make a very handsome profit/living. Instead, we all have to chip in to supplement the employees food, healthcare etc. This is nothing more than privatized profits and socialized costs/risks. BTW – I would be glad to pay 10 cents more for a burger to know the workers are making enough to survive on.

    • Reality check says:

      WHATEVER-
      All i know is that here in america you can better yourself as far as you want- you,yourself are the only obstacle.
      And again,unless you are a manager ,fast food or other entery jobs were never meant to be a life career.
      And half of the fat babymamas workin at mcdonalds have too many kids at home ,many with mutiple babydaddies.
      So the answer is do good in high school,stay clean,go to college or get a trade or the career of your choice and quit looking for freebie handouts and $15 for a job that was never meant to be a life career .
      Of course if you want to keep giving your hard earned money to a bunch of lazy low life losers – GO AHEAD. I FOR ONE AM SICK OF SUPPORTING A BUNCH OF LOW LIFE BABY MAMAS PUMPING KIDS OUT TO GET A HANDOUT.

      • Very true man.

      • Teri Nehrenz says:

        If those “baby mammas” were looking for handouts, I don’t think they’d be working at McDonald’s or any other business. That is a pretty stereotypical and hurtful thing to say about a lot of the fast food workers and entirely untrue. The women you speak of are on the ones on welfare, not working moms who are trying desperately to support their children, regardless of how many you believe they should have; isn’t that their business anyway, not ours? Working in a fast food place is a bust butt job with little reward other than that paycheck at the end of the one or two week cycle. But these “woman” do so everyday and I should add, serve people like you, with attitudes and stereotypes, who aren’t so nice to them with smiles on their faces.

        You may have had one experience with someone like that but it’s not fair to all the others to be grouped in that category.

        About the $15 an hour….that is a subject that is precarious at best. The cost of living certainly has gone up enough to warrant the need for that high a minimum wage but what’s going to happen if the wage is increased? My guess would be that the cost of living will go up again and enough so that the increase in wages won’t make a bit of difference inn a short while. It will become a vicious cycle that will never end. Raise one aspect of employment and the other aspects will have to adjust and the adjustments will be what hurts everyone. The business will have to compensate by cutting employees and raising the cost of goods or services to counter the higher wages. The people left at these companies will be expected to produce more work and therefore will again scream about wanting higher wages….I don’t know what the answer is…my guess is “there isn’t a clear cut answer” like everything else, we’ll have to wait and see what happens. The majority vote will be heard.

  3. As a local small business owner, I couldn’t disagree more. Throwing more money at a problem never fixes the problem, no matter the hot button issue. It’s people’s thinking about the problem that is the true problem. Sorry it’s not the government’s job to mandate a wage. The function of government is to defend it’s people from threats and engage in trade and treaties with other nations. Period. Set up commerce and defense, that’s it. Get out of our lives and provide the pathway for the individual to succeed or fail at their own choosing. Where a person is in life is EXACTLY where they have decided to be, notwithstanding some circumstances beyond their control. If a person is making minimum wage, it’s because they have decided that’s what their time is worth. I believe each person is capable of greatness and we should stop setting the bar so low, fostering a society of wimps and government programs. When the bar is set high, people rise to the occasion and prosper. I guess the difference is truly in our thinking after all. One vein says, the government needs to help. My line says, you can do it, I believe in you, you are capable. That’s a powerful thought. Ideas have consequences and this is not a political statement. I’m neither Republican or Democrat.

  4. John Burrows says:

    Those that think like Bernie and Hillary, and advocate that the government mandate (much) higher minimum wages should make themselves familiar with the Law of Unintended Consequences. It is real and is evident whenever laws are passed (or decisions made) without thinking everything through to the end. To begin with, there would be no end to such mandates: when $15 is achieved, the outcry will be for $18, then $20 and so on. There will certainly be higher unemployment, especially for people 18-30 (employment for anyone under 18 would almost disappear). Anyone disputing this is delusional. Why we can’t look at other countries that have done this and learn from them is beyond my comprehension. It has been suggested that mandating a higher wage will stimulate the economy and reduce welfare costs. Sadly, that will not happen when there are fewer people working at those wonderful higher wages. Australia is a poignant example of higher mandated wages for low-skilled (and those with no skills or education). The result has been curtailed work hours for those that do retain jobs (e.g., restaurants close after lunch and reopen for dinner – and workers are released and not paid for the hours in between). The biggest impact is that the cost of everything goes up when higher minimum wages are mandated. In Australia, my personal experience is that most things are almost double the cost of similar items in the USA. You should be aware of this fact, already proven out in other countries: If $15 (and higher) is mandated by the government, the costs of everything we buy will substantially increase. This will happen, even if the supporters of such nonsense choose to keep their heads in the sand (trying to avoid the Law of Unintended Consequences) and think otherwise.

  5. Reality check says:

    Here is a good idea- have terry donally and johninnv get together and open a fast food place in mesquite.
    They can call it “WELFARE BURGER” or “BERNIE BURGER”
    They can hire and pay all there people $15 bucks a hr.
    Let’s start a pool to see how long they are in business- NOT VERY LONG- lol
    Again these $15 jobs were never meant to be a lifelong career.
    I guess working your way up the ladder or improving one’s life status or having higher goals in life is dead- much like our educational system
    It is merely adding to i want something for nothing mentality these people want.
    Here is some career advise for all the wannabe $15 an hr babymamas – keep your legs crossed and quit kickin kids out with multiple babydaddies

  6. Terry Donnelly says:

    Thank you for thoughtful debate. But, I must ask those of you who poo-poo my theories (not actually my theories, they started with FDR): Why does every conversation about low paying jobs start and end with McDonalds? I can think of no worse company to augment your arguments that higher minimum wages will harm a business, whether individual restaurants are corporate or individually owned. Check out the trailer for this summer’s movie “The Founder”. It sheds daylight on the darkness that is the McDonalds Corp.

  7. I say get rid of Mcky-dees until they can start learning how to make hambugers insted of chicken and nickel sized pancakes.

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