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16 Dec, 2013 13:17

US minimum wage issue - a symptom, not a solution

US minimum wage issue - a symptom, not a solution

Higher minimum wages appear like a nirvana solution to a stagnant economy. They retain crude voter appeal but don’t they drive inflation and squeeze employers?

Cast your mind back to your studies. Then all problems were so simple to solve it was remarkable nobody entrusted us with running the world. Nowadays the spineless visionless mediocrities ‘governing’ the west have failed to mature beyond their naive student phase. This happens when you spend your entire career as a PR/Political advisor/academic lawyer and not working in the ‘real world.’

Consider domestic budgeting: Let’s say last month there was high expenditure compared to income. If you continue spending like a footballer’s wife on ‘crack’ then you are clearly a Z list celebrity tabloid fixture, or a government minister.

Alternatively, sensible behavior involves balancing income versus outgoings and restraining spending: this action clearly proves you practice fiscal prudence and hence won’t be entering western politics anytime soon.

The third option is to demand a wage increase.

Here we reach an interesting point in the space time continuum, or rather the nexus of politicians, employers, employees and economics. In essence, just randomly paying people more really doesn’t solve anything. If only life were that easy, then we would all be rich! Randomly raising pay is self-defeating: rather minimum wages are terribly regressive. They actually hurt honest people keen to work and build their career.

Step back and look at what has been happening in the USA. A tiny stub of the north western corner of Washington state close to the home of Starbucks (Seattle) has just lunged into the sort of territory previously occupied by fruit loop leaders like the late, largely already forgotten, Hugo Chavez. SeaTac’s minimum wage is scheduled to make a quantum leap, rising 63% to 15 dollars per hour.

Naturally workers are happy to receive more money short-term but equilibrium in the local economic ecosystem is now destabilized. Honest entrepreneurial types are unable to expand their businesses...perhaps cannot even sustain them. Jobs are endangered by such knee-jerk wage rises.

Aaron Sherman yells slogans in SeaTac, Washington during a protest march from SeaTac to Seattle aimed at the fast food industry and raising the federal minimum wage and Seattle's minimum wage to $15 an hour December 5, 2013. (Reuters/David Ryder)

Naturally a crazed continuum of leftist agitators who still haven’t worked out why the Soviet Union collapsed and the North Koreans are now killing their close relatives, will complain that evil capitalists deserve their comeuppance for daring to seek profit! Maybe there is a point pertaining to some multinationals exploiting the good citizenry...when they get clobbered with high minimum wages they just offshore everything to, well, anywhere. Mars, Jupiter, hey if North Korea was more open-minded, they would offshore there too (well in greater quantities than they do already, in fact).

Therefore minimum wage stress falls on the smaller guys. Local entrepreneurs, cafe owners and shopkeepers struggle to pay higher wages than they can afford. Massive unemployment blights much of the west; can we really afford to deny citizens a job opportunity, to get on the ladder of work and prosperity? Yip, Walmart looked pathetic with bins in Canton Ohio for staff to enjoy a proper Thanksgiving! The solution is simple: Appalled Consumers, don’t burden the economy with the blunt instrument of a higher minimum wage! Shop elsewhere where staff are decently treated! Besides, how will you feel when your local privately owned convenience store closes?

There is a lot of noise about minimum wages but, this is a symptom, not a solution. America is suffering from a declining dream, reduced social mobility. Guess what killed it? It wasn’t Walmart. It is red tape, intrusive bureaucracy, moronic - (and thanks to being, ahem, ‘managed’ by government) hideously incompetent -, health care initiatives that curtail US growth. Employers are not a bottomless pit of funds to rectify government inadequacy. Likewise, Obamacare costs jobs as employers roster full-time staff on part-time hours to avoid swingeing health insurance costs. Thresholds to exclude small business don’t work either. SeaTac’s small entrepreneurs will train staff to subsidize big business who poaches them for minimum wage - madness!

America needs growth, not moronic initiative destruction as Obama’s intrusive NSA superstate depletes life, liberty and the pursuit of happiness.

Instead of raising the minimum wage, why not spend less on the bloated inefficient public sector? The ‘secret’ to higher wages is less government not more. Higher minimum wages force the backbone of the economy, small business owners, to work longer hours (employing fewer) and raise their prices. Result: a worse than zero sum game.

Wages are driven by growth and efficiency, not knee jerk reactions from inadequate governments. In essence, the higher the minimum wage, the greater the evidence of government failure to deliver prosperity.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.