Ive been seeing a lot of people calling for a hike in the minimum wage... Let me try to put this into perspective. How increasing the minimum wage actually works in the real world… Person A Works at a fast food restaurant for $7.40/hr Person B Works as a website designer for $15/hr Value of money is what matters, NOT how much you have. McDonalds Burger = $0.99 Essentially, Person A can buy 7 burgers evenly. Essentially, Person B can buy 15 burgers evenly. , let’s say that minimum wage hits the suggested amount of $11/hr (at least that’s what I’ve been seeing). Person A Works at a fast food restaurant for $11/hr (via the new minimum wage). Person B Works as a website designer for $15/hr (his company doesn’t increase his pay because… Why? They aren’t required to.) So, in a PERFECT world where companies don’t mind losing profits… Essentially, Person A can now buy 11 burgers evenly. Essentially, Person B can still buy 15 burgers evenly. Still with me? Great. But, this is REALITY we’re talking about here. Companies will refuse to lose money, so they will pass the costs off somewhere… That’s to the customer. Person A’s company now has to pay their employees $3.6 more per hour. That’s an increase of ~ 48.6%. That burger that was $0.99 now costs 48.6% more, which equals ~ $1.47 Essentially, Person A can now buy 7 burgers evenly. Essentially, Person B can still buy 10 burgers evenly. So, what happened? Person A can still only by 7 burgers, BUT person B can now only buy 10 burgers… Person A lost nothing, but Person B lost 5 burgers worth for his money. Wait, doesn’t person A have more money because they increased the minimum wage? Sure! They have “more money”, but they money lost its value so they have the same exact buying power. How much value was lost? Well, originally, the total the two could purchase was 22 burgers… After the minimum wage increase the total they could purchase was only 17. The dollar lost approximately 22.7% of its value by increasing the minimum wage by a mere $3.6. So, tell me… What’s more important? How MUCH money we have, or the VALUE of the money that we have? Please note that the price of a burger in and of itself may not go up by the exact percentage, but a mix of items will go up such as all the items in a combo meal. I just used “burger” for simplicity’s sake. Now, imagine if you will what this would do on a grand scale... The cost of all the materials goes up to produce the burger, to transport the burgers, as well as the cost of the restaurant to pay its people. So, in reality the increase of 48.6% is given to each level of production of the burger... Think about it.
Posted on: Fri, 24 Jan 2014 05:25:33 +0000
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