a reply to: interupt42
This is a fantastic post and I'm not at all surprised (disappointed, but not surprised), nobody has replied to it. You actually get it and that's not
only rare, it's looked down upon by those who don't.
There are several huge issues that would occur if the feds passed a $15/hr minimum wage hike.
1. Only those under $15/hr would see a measurable raise.
-Take a place like Tucson, AZ. Current right out of college Engineer in Training positions at a Civil firm there are running around $40-$45K per
year. That's $21.50 an hour. Min. wage in AZ is $8.05 an hour. That means a college educated, entry level professional is making about 2.67-times
minimum wage for their investment of 4+ years and $40,000+++ for their education. Now, boost minimum wage to $15 an hour, that's an 86% raise... does
believe the EIT is suddenly going to get called into their boss' office and will e told "Son, we're bumping you to $40 an hour"?
GET REAL. Now view it from the EIT's point of view. Not only are they receiving less benefit from their investment of time and real money, their
purchasing power just became significantly reduced thanks to supply and demand. Suddenly the local 3 star restaurant he takes his girlfriend to on
special dates is charging $35 a plate instead of the prior $20. Rents are going to go up at nice apartments because those folks who saw their wages
double by mandate aren't going to want to stay shacked up with roomates... no, they're going to put more pressure on the rental situation, which
leaves our EIT friend paying even more when his lease expires.
2. There will be a glut of laid off older workers. If you've got a business which is paying somebody $20 an hour merely because they've been working
for you for all these years and now you're told not only do you have to provide them health care (ACA), but your other workers under $15 an hour now
must be bumped up to $15, you're gonna look for savings wherever they can be found. Guess what? 50 year old Harry costs your insurance plan a lot
more than 18 year old Joe does, so Harry hit the road.
3. Profits don't "go down" in business. When profits go down, those are called "losses." Business operates differently than home finances do... in
business (and this is run as much by federal regulations and IRS reporting rules as it is Wallstreet greed, so don't start in with the 99% bullcrap)
you set a profit goal and if you fail to meet it, you post the amount you missed it by as an operating loss. That means if it suddenly costs a
business 86% more to produce something, prices WILL go up. Furthermore, thanks to FAR (Federal Acquisition Regulations) every business is permitted
(and expected) to use an IRS determined overhead rate which represents their true cost of business. That rate seems to be in the 2.5 range for most
companies. In other words, a $15 wage actually costs a business $37.5 an hour.
Sooooo, say someone is working as a contract worker and their company bills their efforts out at $30 an hour. That person makes $10.80 an hour,
considering the overhead rate that costs the company $27 an hour, and that company is making a very modest 11% profit of $3 an hour. Now the law
changes and that worker must be paid $15 an hour. Factor the overhead gives us $37.5... now if the company "IS MAKING GOOD PROFITS ALREADY SO WHY
SHOULD THOSE GO UP?" and capitulates to people who have ZERO business suggesting how someone else's business should run, and takes their previous $3
per hour profit, the amount billed to the customer still just escalated by $10.50 to $40.50. That's a 35% increase in costs to the customer and the
company just saw it's profits drop from 11% to 8%!!! If, however, the business operates as businesses should and takes their modest 11% same as
before, the customer cost is now $41.67.
So the difference between greed and good as far as the company's profits go in this scenario is $1.17 an hour whereas the difference between "fair
wage" and "unfair wage" is reflected in a $10.50 increase to the customer.
Well, there's yet another great reason why I'm thrilled to see the Left's version of "The Unelectable" Ron Paul in this race. My wallet and my sanity
appreciate him being the only one pushing this stupid idea.