Friday, July 24, 2009

Liars Lie - Minimum Wage

by Dick Mac

If the liars stop lying then those of us who tell the truth won't hold such a virtuous spot in our own minds; so, the liars lie and those of us not lying at that moment can feel superior.

The most insidious of liars are the economists. Understanding the economy and economic theory seems to be more difficult for the average person than understanding law, medicine, or rocket science. So, economists generally speak with authority and go unquestioned.

Today's debate is, of course, the evil of increasing the minimum wage.

Let's start with two facts: (1) a person working full-time for the new minimum wage earns. $15,080 annually; (2) economists consistently argue that an increase to the minimum wage will hurt small business.

Wikipedia describes: "A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. The legal definition of "small" often varies by country and industry, but is generally under 100 employees . . . " Small business, From Wikipedia, the free encyclopedia

Now, to the anecdotes and opinion!

Many minimum wage workers are single mothers. So, two people are actually surviving on fifteen grand (less taxes). I live in an urban setting: Brooklyn, New York, where there are many small businesses: bodegas, fruit stands, contractors, and the usual array of small businesses. These small businesses stand alongside and compete with huge businesses like CVS, Walgreens, grocery store chains, Home Depot, etc.

My conversations with small business owners who employ US citizens and legal immigrants, and the people who work for them (my neighbors), reveal that most of the staff already earn more than $7.25 per hour; and often as much as ten dollars an hour. My conversations with those who manage big-business chain outlets reveal that big business usually pay only minimum wage. A small business needs to pay a bit more to get more talented people to help them run their operation. A chain needs anybody available to push buttons like an automaton in an automated enterprise.

In the debate about increasing the minimum wage, citizens and politicians generally say this is a good thing, and economists generally say the increase will be the death of small business. And then, of course, there are the people who watch Fox News and believe what they hear (but that's a different conversation).

My experience is that small businesses already pay more than the minimum wage, that only big business pays the minimum wage, and that everybody benefits from modest and regular increases in the minimum wage.

Hell, even the economists benefit, because they get air-time to spread their lies about the fragility of the marketplace, potentially increasing their audience for sale of their latest book.

I don't really think anybody is hurt by an increase to the minimum wage. Well, shareholders and CEOs are probably exposed to potential decreases, but they just raise prices and fire people on the bottom of the ladder to ensure their gain. I do not believe, however, that small businesses are hurt by the increase; and small business does not fire staff because they are now entitled to $7.25 an hour.

In the late-1970s, economists began getting air-time to promote their favorite topic: supply-side economic theory. For the past thirty years, we have allowed them to implement this strategy, to disastrous results. Supply-side theorists always lie, not because they are liars, but because their theory is completely flawed and illogical. You can't give all the money, tax breaks, and benefits to the people at the top of the economic ladder and believe that the money will somehow come back down to benefit the entire nation. It's illogical, and after thirty years we see that it is a failure.

Yet, the news agencies continue to let these liars talk on-air about the evils of progress and regulation. And, sadly, many listeners believe them and vote for politicians who espouse their theories as sound economic policy (that is, four of the last five Presidents of the United States - only Bush I spoke out against the folly of Reaganomics).

So now the economists are telling us that an increase in pay to fifteen grand for the poorest of Americans is a bad idea.

Who are these economists and on which planet do they live?

It seems to me that many small businesses already pay more than the minimum wage, and will not be hurt by this increase; and that minimum wage is a tool of the powerful used to ensure that big business never has to pay their employees very much money.


Anonymous said...

Of course, like everything else having to do with employment law, the minimum wage laws have all kinds of exemptions. If you have the stamina you can sort through them at

Big business, their lobbies and the Repunican lawmakers in their pockets are the biggest liars when they base their arguments on protecting small business.

Laws other than those applying to wage restrictions have exemptions for small and family-owned businesses. FMLA and ADA, for instance, only apply to employers with a certain number of employees. Small business-owners are also provided tax advantages that offset much of the "damage" done them by being forced to treat their employees as human beings.

Anonymous said...

There is plenty of lying to go around. Democratic pols claim the minimum wage increase is to help the single moms like you say but dig deeper. Union workers are generally paid a multiple of the minimum wage so when the min wage goes up, bingo, union wages go up.

If two people contract with one another as one in the employ of another then by what right does the govt have to come in and violate that contract or set differnet terms of the contract?