With the debate over raising the Federal Minimum Wage becoming more contentious, opinions both Pro and Con, are coming fast and furious. Politicians, Economists, Historians and members of the Media are pulling no punches, portraying the opposition as irrational and out of touch with the realities of Modern Economic Theory.
However, are there certain things we can know regardless of what is said by either side? Yes, and that is where we must start, in finding the solution that has the greatest positive impact on our National Economy, and the Quality of Life for every American.
Question #1- Will raising the Minimum Wage to $10.10/HR from the now Federal Minimum of $7.25 result in the loss of thousands of Jobs?
Before I discuss that question directly, we must look at one topic that seems to be constantly ignored, yet lies at the heart of the question;
LAYING OFF EMPLOYEES MAY ELIMINATE THE TOTAL # OF JOBS, BUT IT DOES NOT REDUCE THE AMOUNT OF WORK THAT STILL NEEDS TO BE DONE FOR COMPANIES TO REMAIN PROFITABLE. FEWER WORKERS DOES NOT MEAN FEWER GOALS/RESULTS THAT MUST BE MET.
Historically, when lay-offs have occurred, it was because the amount of work that needed to be done had decreased. The # of employees was too high to justify, in terms of profits, the amount of work that was being done at the time. This is basic economics: Hire more to match increased work load, or lay- off because of decreased work load.
However, those who object to increasing the Federal Minimum Wage, are not able to use this line of reasoning. The production numbers are still there to meet consumer demand, whether it is Cooking Meals, Delivering Goods, Retail Sales etc.
Those who oppose raising the Minimum Wage are left with only this- That the cost of these pay increases cannot be absorbed by businesses, in that they will lower profits to an unmanageable level to keep companies economically viable.
Is this true? Look for part two.