The Democrats are in the middle of writing a book called, “How to Bankrupt a Super Poer in Just 4 Years or Less.” The book may not be a success but their plan very well could be.
A minimum wage of $15 dollars is ridiculous, but a minimum wage of $26 dollars an hour is ludicrous. Would you be willing to shell out $20 dollars for a Big Mac? How about Bread at $15 dollars a loaf? And what about people who are making $26 dollars an hour now?
Do we pay a burger flipper the same amount as we pay a nurse? That would be a huge pay cut for nurses. Well, you could bump nurses up to $60 bucks an hour, but by the time you raise everyone’s wages, you would be right back where we are now.
That’s because their paycheck would be eaten up by inflation. The dollar would lose at least a quarter of its value. But, believe it or not, that isn’t even the worst of it.
Our products would become so expensive that we couldn’t sell toothpicks overseas.
And not only won’t there be jobs paying $26 dollars an hour, there would also be no jobs at all. Companies would never be able to survive in this country and they would be forced overseas, where they could pay a decent wage without breaking the bank. A $26 dollar an hour minimum wage is $54,080 a year.
Having the minimum wage track productivity growth is not a crazy idea. The national minimum wage did in fact keep pace with productivity growth for the first 30 years after a national minimum wage first came into existence in 1938…
Think of what the country would look like if the lowest paying jobs, think of dishwashers or custodians, paid $26 an hour. That would mean someone who worked a 2000 hour year would have an annual income of $52,000. This income would put a single mother with two kids at well over twice the poverty level.
And, this is just for starting wages. Presumably workers would see their pay increase above the minimum as they stayed at their job for a number of years and ideally were promoted to better paying positions. If we assume that after 10 or 15 years their pay had risen by 20 percent, then these workers at the bottom of the pay ladder would be getting more than $60,000 a year.
Economist Dean Baker argued in the piece that the minimum wage ought to keep pace with overall economic productivity.
Baker acknowledges that the policy would cause mass unemployment if implemented in the present economic order; however, he recommended fundamentally restructuring the economy such that wealthy Americans earn less income.
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Author: Steven Ahle
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