Minimum Wage: In the end, economics always wins out over emotion and stupidity

Now that several states and businesses have ceded to the masses and are beginning to institute large hikes in the minimum wage, the reality of economics and human greed is setting in almost immediately.  For years, Democrats, liberals, and and progressives have sought to raise the minimum wage for the unskilled worker as a means of appeasing their voter base, yet this argument has missed the point entirely since the problem has never been about wages, but about the devaluation of the currency.  And with the success of the activist led minimum wage movement having finally resulted in hikes of as high as $15 per hour, the consequences of not seeing the entire picture is leading many to abandon their newly acquired increases for a whole host of reasons that include: losing welfare benefits, envy by those with more education, skill levels, and achievements, and the newest reason… replacement by machines.

Seattle July 2015:  New $15 per hour workers ask employers to cut their hours because they make too much money

The very arguments made by supporters of a minimum wage hike are now the very reasons why a multitude of poor people are suddenly backtracking and asking their employers for less hours in the workplace.  The hike to hourly minimum wages was intended by the establishment to boost people out from under the poverty line, while also helping to cut back on the over $1 trillion spent by states and the Federal government on welfare to the poor.  But human greed is and always will be a powerful thing, and rather than rely upon work and higher wages for their standard of living, the realization that a $15 per hour job would make their income level ineligible for benefits they previously received is too much for some, and are leading many to ask their employers to cut their hours so they can remain under the poverty line, and still receive free assistance from the government.

Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.

Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.

Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.

“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM. – Fox News

Gravity Payments 2015:  CEO raises all salaries to $70,000 per year, causing many to quit now that they receive same pay as lessor skilled workers

Throughout American history, corporate and government leaders have used their wealth and influence to experiment on the human condition, usually to the detriment of the people they sought to help.  From Robert Owen’s New Harmony project in the 1800’s, to Sims Ely, who was an extremely conservative administrator from the Department of Justice who ran a camp that was housing Hoover Dam workers like a military outpost, men and women since the beginning of time have forced their ideologies onto others through the use of enticing beliefs and charisma to attempt to forge their versions of a ‘brave new world’.

But as is the consequences with almost all planned and regimented schemes, nature has a way of attacking ideological fortifications built contrary to free will and free enterprise.  And in the case of CEO Dan Price over at Gravity Payments, raising the pay of lessor skilled and lessor achieving workers to equal that of the most successful, inevitably lead the achievers to quit for better opportunities, and leaving the company with only increased labor costs, and lowered output and production.


After talking with a friend who confessed to having difficulties making student loan payments and rent each month on an annual salary of $40,000, Dan decided to set a $70,000 per year pay floor at Gravity.

Dan was not, The New York Times says, looking to insert himself into “the current political clamor over low wages or the growing gap between rich and poor.” All he wanted to do was improve the lives of the 120 or so people who worked for him and after reviewing some literature on the subject, he decided that $70,000 was the level at which workers start to experience “an enormous difference in [their] emotional well-being.” – Zerohedge

However, as the old saying goes… no good deed goes unpunished.

But even as Dan adjusted to life as a rebel hero and basked in his newfound popularity among third graders and single women, he quickly learned that whether he liked it or not, he had waded waist deep into the minimum wage debate and he would soon discover a few very hard lessons about the unintended consequences of hiking the pay floor.

First, some employees felt it wasn’t fair to indiscriminately give everyone a raise. That is, some felt Gravity should at least pay lip service to the notion that there’s a connection between higher pay and performance and because the new pay plan didn’t seem to acknowledge that link, the company lost some workers.

Walmart as a bellweather 2015:  Higher forced labor costs lead to layoffs not just in Walmart itself, but as a chain reaction for vendors selling goods in the retailer

Earlier this year, WalMart became one of several corporate heavyweights to lift wages for its meagerly compensated workers, around 500,000 of which are now set to receive at least $9/hour and $10/hour by Q1 2016 (that of course assumes they make it on $9 an hour for another 12 months and don’t seek out other employment by sheer necessity).
Meanwhile, the move by the country’s largest retailer to pay a few extra pennies to its (basically) minimum wage employees comes at a cost to the company’s suppliers because when you operate on the thinnest of margins in order to be the “low price leader,” someone has to pay for those wage hikes and you can’t pass along the costs to customers because many of your low-income patrons are operating from the same tax bracket as your low-paid employees. As such, the supply chain is forced to lower their prices and of course they’re going to comply because well, you’re WalMart meaning you’re your vendors’ biggest account pretty much by default. The outcome is that “while WMT (or MCD or GAP or Target) boosts the living standards of its employees by the smallest of fractions, it cripples the cost and wage structure of the entire ecosystem of vendors that feed into it, and what takes place is a veritable avalanche effect where a few cent increase for the lowest paid megacorp employees results in a tidal wave of layoffs for said megacorp’s vendors.” – Zerohedge
And of course, labor costs increases will not be absorbed solely by a business, but by the consumer who will see these extra costs in prices, quality, and amount of product.
price versus mimimum wage
The sad part in all of this is that six decades of irrational Keynesian economics has completely destroyed the basic understanding of money and fiance, and is in part what has made America no longer competitive in the global economy.  Through a program of un-sterilized money creation,  coupled with illiterate government regulations, leadership in America has engineered an economy that deals only with symptoms, and has little understanding or the stomach to resolve the root causes.  And in a world that is now educated to think with emotions rather than with logic and critical thought, each subsequent ‘solution’, like this newest scheme of raising the minimum wage, will only create new problems that the government and corporate America is ill equipped to handle, much less resolve.
Kenneth Schortgen Jr is a writer for,, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.
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