Archives for posts with tag: Minimum Wage

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The Philosopher

We Got Trouble, Trouble, Trouble, Right here in the USA, It Starts with “M” and that stands for Minimum Wage Ver. 1.0
The Top Gun National Crises Troubleshooter
February 21, 2014

Minimum Wage is a tough call especially at the Federal level. One shoe does not fit all. And the cost of living is drastically different in different areas of the country. Minimum Wage is best served at the local level.

When Minimum Wage is standardized employers will wait until the Minimum Wage is increased before they will increase employee wages because there is no competition in wages, so they do nothing. If the Minimum Wage did not exist, regulators would have no leverage to rain in obvious oppressors, so certainly something is needed to provide regulators with legislation to prevent oppression. But what regulators, Federal, State, County or Local, that is the question? I think the Feds should let the locals handle this one; they are at the ground level where wages can be better regulated. There are two regulators at the local level that could manage Minimum Wage in their geographic areas of control, City Councils and County Supervisors. These are the overseers that should be in control of Minimum Wage in their designated geographic area of authority.

When the Federal Government manages Minimum Wage the whole country is managed as one unit with an equal “Cost of Living Index”. This is a “One Shoe Fits All Approach” and does not account for the “Cost of Living Index” to be greatly different in different geographic areas of the country and has the following ramifications:
1. Employers and providers will cut expenses and raise prices for their “Goods Sold” they are providing. This will result in jobs lost, higher prices for everything resulting in an increase in the “Cost of Living Index” (COLI) for everyone including those on “Fixed Income”. Therefore, those on “Fixed Incomes” will lose purchasing power. If they are on Social Security they will start putting pressure on the Congress to raise their Social Security Benefits to meet the increased COLI. For those with Cost of Living Adjustments (COLA) in their pension plans only a portion of the rising COLI will be covered as the COLA is designed to only manage the (COLI) from natural inflation in their geographic area not from a surge in the COLI from an increase in the Minimum Wage.

2. Raising Minimum Wage will create an increasing spiral effect on the “Cost of Goods Sold”. There is a multiplier effect that will greatly increase the “Cost of Goods Sold”. That is there is a ripple effect from the Manufacturer Supplier to Distributor to Seller. Each time the products change hands an increase of fifty percent or more in the “Cost of Goods Sold “can be expected due to the increased cost of the distribution process. This phenomenon exists because as the COLI increases, employees will demand higher wages from their employer even though they are above the Minimum Wage level. (I am old enough to remember having to get 10-15% raises just to keep up with inflation; do we really want to experience that again?).

3. Raising the Minimum Wage at the Federal level will result in an increase in inflation for everyone and the Federal Reserve will be called on to manage the new inflation of the cost of everything in the country.

When the State Government manages the Minimum Wage in their state, the effect is over a smaller geographic area making the rising “Cost of Goods sold” less dramatic than when managed by the Federal Government. The COLI will be more evenly distributed throughout the state, but not as evenly as if the Minimum Wage were managed at the local level, by City Councils and County Supervisors.

In Conclusion:
Minimum Wage Control should be managed at the local level by City Councils and County Supervisors as they have the best “Feel” of what is needed in their geographic area of control.