Thoughts on minimum wage increases…

I am just thinking aloud here, but my logic is telling me that minimum wage increases shouldn’t and don’t have the effect some people and organizations say will happen.

See…here is what raising minimum wage gets everyone, the middle class pays for it, as the salary changes made to accommodate for manpower will initially result in price hikes, but in efforts to minimize client/customer impact, all middle positions will be the first ones hit as those are the easiest to justify. The $5 extra you might get from a raised minimum wage doesnt magically come out of the decision maker’s profits. It doesn’t work that way. Businesses are there to make money, and the owners of those businesses are rarely there on behalf of all their employees.

More importantly, lets touch on the targeted demographic: minimum wage earners, which is specifically NOT the unemployed demographic, which everyone immediately assumes to be the primary beneficiary. Nope, what we’re talking about are the people that already have jobs, because the businesses will not restructure themselves with a goal of spending more money on labor. they will restructure themselves in a manner that minimizes the impact of increases in cost of labor.

This doesn’t help the poor in the least, it just makes 10% of the country less poor, and 30% of the country more poor as the impact of adjusted salary plans are engaged to accommodate for the hike in minimum wage.

Now, do I have your attention? Good. Here is what I think will make it worse. This disconnect in income differences further segregate wage earners from each other. This meas those that make more are further separated from those making less, initially this is only a change in wardrobe or car model, but over years it quickly develops into a very clear social distinction between groups that average less and/or more annual income. I am saying that it will exacerbate a social division already present. Inflation hits and the cycle repeats itself.

Now, I am not an economist, and this is all pure streaming thought with only cursory research, but seriously, how is raising the minimum wage by itself going to fix the poverty line?

-Tony