A study conducted by economists at the University of Washington reveals what anyone that has been in business for over 10 seconds already knows. When, you are forced to increase minimum wages, workers lose.
Seattle increased the minimum wage to $13 per hour a couple of years ago. Advocates wanted it to be $15, but that idea is waiting for a national decision. As expected, low-income workers lost hours and money. In fact, low income workers, according to the study, lost an average of $1,500 per year. When you barely get by, that’s a big hit.
Reality is that business must control fixed cost or raise prices. When a price increase is not feasible, cost cannot go up. Low-income jobs always get hit when times get tough or when times are booming. There is always a way to cut labor, either through technology or having full time employees absorb the tasks.
Low-income jobs are rarely meant to pay enough to support a family. They usually are part-time and require minimum skills. This is why they usually are filled with students or old people looking for something to do or supplement their retirement.
Over the years, I had a few minimum wage jobs. Being bright enough to tell I was never going to get rich, I chose to increase my skills and education. Not only did I benefit, but I left a spot for someone else on their way up in the real world to get a little pay, while they learn to do better for themselves.
The bottom line is that increasing minimum wage to unrealistic numbers will never make anyone more money, except the government.
It’s a good thing Seattle didn’t raise the wage to $100 per hour.
Everyone would have lost their jobs.
PMO
©2017
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