Wednesday, July 24, 2019

The future: a $15 an hour minimum wage and more 100 degree days?

The House of Representatives passed a bill recently that would increase the federal minimum wage from the current $7.25 an hour to $15 by 2025. Proponents call this a “living wage.” The House vote was 231-199 with 3 Republicans supporting it and 6 Democrats opposing it. 

It’s not breaking news that raising the minimum wage to $15 per hour is a divisive and hotly debated topic. What’s lacking is any sensible reason to do this, unless you consider vote buying as sensible.

Most minimum wage earners are younger and just entering the world of work. The Bureau of Labor Statistics reports that in 2018 only 2.1 percent of all hourly workers earned the minimum wage, or less. These workers tend to be under 25 years old and work in the food and hospitality industry.

The younger minimum wage workers generally do not require a “living wage,” as many still live with their parents or are college students, and few are the head of a household.

As with other work, some minimum wage workers are really good, some are okay, and some aren’t good at all. But a $15 minimum wage means that the best and worst employees in minimum wage jobs will earn the same $15 wage, which nets out at $31,200 a year for a 40-hour per week full-time job. 

As a matter of sound economics, government should not dictate minimum wages or any wages, other than for government workers. But should this become law, government will have increased the payroll expenses of virtually every business in the country.

While minimum wage workers will reap significant benefits from the increase, business owners will face mandated increases in payroll expenses. For a business to operate successfully it must have more income than expenses. This makes achieving that goal more difficult.

Every employee who was making more than the old minimum wage will get a raise to the new minimum. Those making above the minimum should also get their additional wages added to the new minimum, or they will not be happy.

Where will that money come from? Likely sources are higher product and service prices; reduced employee hours; fewer employees and perhaps more computers and robots. And, if these solutions are not sufficient to maintain profitability, businesses will close and jobs will be lost.

A July report from the Congressional Budget Office estimates that up to 3.7 million Americans would lose their jobs if the minimum wage were raised to $15 per hour by 2025.

Vermont Sen. Bernie Sanders, who claims to be an Independent, but is seeking the Democrat presidential nomination, claims the $7.25 minimum is “starvation wages.”

But – surprise, surprise – Bernie does not practice what he preaches. After his statements supporting a $15 minimum wage and raising the minimum above the “starvation” level, many of his campaign workers began complaining that he isn’t paying them at that level. 

It was reported that henceforth campaign workers will be paid at least $15 an hour, but some would have their hours reduced to keep wage expense down. 

Boom! Reality hit the Sanders campaign. But will Bernie learn the economics lesson, or continue to peddle the false narrative that every working person needs to make at least $15 an hour in order to stay alive?

However, because of all the harm this measure will do to the economy, the Republican-controlled Senate will almost certainly vote against the legislation, saving jobs.

In other news, a recent story in a South Carolina newspaper predicted that “by the middle of this century, the number of sweltering days in the Palmetto State is forecast to increase by more than 350 percent if little or nothing is done to stop man-made climate change,” and by “the end of the century, the increase could approach 600 percent.”

Global warming advocates will readily endorse this prediction, especially after last weekend’s very warm temperatures and heat indexes of 100 degrees or more. 

This discomforting prediction comes from a report by the Union of Concerned Scientists (UCS) showing that the United States is heating up rapidly due to climate changes, which these scientists attribute to human activities.
Increases in the number of days with extreme, dangerously hot weather can be expected to rise sharply in hundreds of cities across the country, the researchers say.
The UCS says it’s already too late to prevent all of the rising heat, but the country can slow down the trend with aggressive action to halt man-made global warming. The UCS did not propose that the nation adopt the wild and crazy Green New Deal, but conceivably might do so at some point.

If humans are causing this warming, can the United States really do enough to stop it? We have led the world in carbon emission reductions for years. Other nations, China and India, to name two, not only are not reducing carbon emissions, they are increasing them.

Why are Americans expected to sacrifice jobs, lifestyle and amenities to try to stop global warming? We must demand that the rest of the world, particularly China, India and the other culprits, catch up with our progress on emissions, and not punish ourselves.

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