Minimum wage increase cause business to compensate… Go Figure!

File this under DUH!

A business exists to make money. If it doesn’t make money it goes out of business. That’s it… end of story. When the cost of labor goes up the business’ profit goes down unless adjustments are made. One of two things have to happen. Either find a way to reduce the cost of labor or increase the price of the good or service offered. It’s very simple. There is no bottomless pit of money unless you’re the U.S. government that can print cash forever and a day.

The rising minimum wage in California didn’t significantly affect the number of hours worked per store. What changed, as the company apparently tried to keep its labor costs down, was who worked those hours. “As the minimum wage increases by $1,” the authors say, “the number of workers scheduled to work per week increases by 27.7%, and the hours assigned to each worker decrease by 20.8%” For the average employee earning $11 an hour, losing that much time on the clock would translate to a wage reduction of 13.6%.

One way this can create savings for the company, however, is that workers generally need 20 hours a week to qualify for retirement plans and 30 hours a week for health care. The authors calculate that for an average California store, “when increasing the minimum wage by $1, the percentage of workers with weekly hours longer than 20 and 30 decreases by 23.0% and 14.9%, respectively.”

Wall Street Journal

Aside from this I learned over the years that the minimum wage is part of systemic racism. The minimum wage was originally introduced to keep cheap unskilled black labor from competing with more experienced white labor.

Our nation’s first minimum wage law, the Davis-Bacon Act of 1931, had racist motivation. During its legislative debate, its congressional supporters made such statements as, “That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country.” During hearings, American Federation of Labor President William Green complained, “Colored labor is being sought to demoralize wage rates.”

Walter E. Williams

This is the type of systemic racism that needs to end and instead the citizens have been taught that a low minimum wage is racist. Everything has been turned on its head.