The Job Killing Minimum Wage Increase

The big push by the Democrats to increase the minimum wage is designed to do two things: Placate the lower income class, who already mostly support the Democrats, and make the unions happy.  But in reality, increasing the minimum wage is nothing but a job killer.  Obama and the Democrats tout an increase from $7.25 to $10.10 an hour and Obama has announced he will be issuing an executive order setting the minimum wage for workers covered by new federal contracts to $10.10 an hour.  What he neglects to tell anyone, however, is that this will only affect around ten percent of the 2.2 million federal contract workers, since most already make more than $10.10 an hour.  Also, it won’t take effect until 2015 and will only affect new federal contracts, not existing ones.  All in all, it is not the big change that Obama is making it out to be. 

Obama isn’t the only one advocating for an increase in the minimum wage.  There are state and local governments around the nation that are doing the same thing.  Watchdog.org has reported that there are about thirty states considering an increase to the minimum wage on the state level.  A Quinnipac University poll found that 71 percent of voters around the nation support raising the minimum wage, including a slight majority of Republicans.  Surprisingly, even though so many support an increase, half of those polled said an increase would lead to job cuts.  But they want it anyway.  Small business owners around the nation have already been saying that an increase to minimum wage will mean fewer jobs.  “If a small employer has a certain amount it can pay for wages there’s going to be less employment available or fewer hours available,” said Tim Phelps, president of the Missouri Merchants and Manufacturers Association. 

There is one group that would be very happy to see an increase in the minimum wage – unions.  Although most union workers make far more than minimum wage, a lot of their contracts base the pay scale for union workers on the minimum wage.  If the minimum wage is increased then union pay is automatically increased, either the same percentage as the minimum wage increase, or to a set amount higher than minimum wage.  As Richard Berman of the Wall Street Journal said, “Altruistic solidarity with lower-paid workers isn’t the reason for organized labor’s cheerleading.”  Does anyone believe unions care that the number of true minimum wage jobs will decrease as a result of raising the minimum wage?  Of course not.  I can even point to a case where an increase in union pay cost one of their own his job.

In Bethany, OK, the firefighters union, local 2085, was awarded an eight percent pay increase after a contract battle with the city went to arbitration.  After the increase was awarded, the city responded by laying off one of the firefighters to cover the cost of the increase.  Naturally, the firefighters union is screaming retaliation, but the city manager says the money just isn’t there and the union knew in advance that a job might have to be cut.  The Bethany Mayor released a statement in which he said the city budget is down $214,203 in revenue from last year and that the city asked the union to take a four percent raise instead of eight percent.  The four percent difference is almost the exact amount of the total compensation package for the laid off firefighter.  Of all the articles I have read about this I have not seen one union member advocate relinquishing the four percent so their union brother could keep his job.  The union is filing a grievance with the city and the outcome will be interesting to watch. 

While this is just one union and one example of a union pay increase costing someone their employment, the cost to small businesses will be overwhelming.  Common sense says that any increase in the minimum wage will come out of the pocket of small business owners, who will naturally pass that cost on to customers.  Higher wages do not just magically appear out of nowhere.  After reading comments on articles about small businesses and the minimum wage it’s plain that there are people who believe small business owners all live in mansions and drive a Lexus, so of course they can afford to pay their employees a “living wage” instead of “slave wages.”  When small businesses start closing because their owners can no longer afford to keep them open maybe some of these people will begin to understand.  When their burger and fries cost them $15 maybe they will begin to understand.  When their kids can’t get summer jobs because there aren’t any, maybe they will begin to understand.  Probably not.

The Democrats are trying to use this push to increase the minimum wage to their political advantage.  No matter that it will kill jobs and small businesses, further destroying our economy.  The Democrats obviously do not care if our economy is destroyed or they would not have passed the train wreck that is Obamacare.  Even the liberal New York Times recognizes this.

New York Times – Democratic Party leaders, bruised by months of attacks on the new health care program, have found an issue they believe can lift their fortunes both locally and nationally in 2014: an increase in the minimum wage. 

…top Democrats see not only a wedge issue that they hope will place Republican candidates in a difficult position, but also a tool with which to enlarge the electorate in a nonpresidential election, when turnout among minorities and youths typically drops off.

Putting aside for the moment the fact that the government should have no authority to tell a business what they pay their employees, if a minimum wage increase helps the left increase their political power and increases union pay, they will be all for it.  Never mind that it hurts small business.  Never mind that it hurts the economy.  Never mind that it eliminates jobs.  Never mind that it actually hurts the people they claim to be helping.  But then again, the politicians pushing for this are only interested in helping themselves.  They’ve already proven, time and time again, that the economy of our nation comes second to their own selfish self-interests.