The Problems With a Minimum Wage Mandate

Let us use the $15 wage paid by Amazon as our median. $15 an hour in Lawrence , Kansas would be a fair wage for low skilled work in most cases. When to apply that same criteria in San Diego, California, it become a problem. $15 an hour does not buy as many goods and services in San Diego. The regional cost of living is a huge factor.

Now we break it down into another set of criteria. Some businesses operate on razor thin profit margins. Many of these industries employ low skilled workers. When you are required to pay a minimum wage to low skilled workers, the results can be bad for business. The results can be fewer workers hired, while existing workers are given more work. Raise prices for goods and services, which may cause a loss of customers. Cut backs on the quality of goods and services, which is never good for the bottom line. We must also consider that the real cost of hiring any employee contains government taxes paid by the employer, benefits, uniforms, etc. These costs add about 30% to the cost of hiring someone above their paid wage.

So many things to consider whe the government tries to get involved. Usually the “unintended consequences” of government rules and regulations are much worse than the problem they were trying to resolve.

Always look behind the scenes when you hear any politician proposing a government solution to a problem. Follow the money.

 

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