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For those of you who have visited this blog more than once and those of you who have read my postings more than once, you will no doubt remember this one.
It is about the minimum wage and why increasing it willy nilly is a bad thing to do, no matter how much workers piss and moan that they need more money.
First of all, as soon as the minimum wage is increased, other items like health insurance and taxes increase as well. There have been times where I have turned down a salary increase because it put me into a higher tax bracket and the increase was not enough to offset the increase in taxes.
However, something worse also happens and that is that employers are faced with a few choices when the minimum wage increases:
- employers lay off workers
- employers raise their prices
- employers relocate their plants
- employers hire older workers
- employers reduce their profits
This last one will hardly ever happen, but some firms have been known to do this.
More than likely, employers will raise prices and in so doing this has a ripple effect on the economy and within about 90 days to 6 months, other companies have raised their prices and we have INFLATION.
THREE PERCENT inflation is good economic growth, TWO PERCENT is better... ONE PERCENT is not so good.
Increases in wages and salaries should take place when the economy is growing a 2-3 percent because the increase can be easily absorbed into the normal growth cycle.
BUT... it is during these times that the workers don't need money so no one is bitching and complaining about not earning enough. AND... employers are hesitant to pay workers more with just meager growth opportunities.
CURRENTLY, the worker is hurting and needs more money but if that happens, they will probably be no better off after the increase than before and there is a good possibility, they could be worse off.
SO....
what can the worker do?
First - the worker can cut back on their current lifestyle and/or quality of life. That is to say, stop buying alcohol and cigarettes. Drink more water. Exercise to reduce stress. Keep the car instead of buying a new one. Take cheaper vacations. Don't spend as much money at Christmas or for birthdays and other holidays.
Second - the worker can look for another job at a different company in the same area or outside of the area or even outside of the state. The wages are higher up north but so is the cost of living... and this point goes back to NUMBER ONE.
Third - the worker can work a second job or the worker can return to school for more education or training that would qualify s/he for a better paying job.
There are other things that workers could do but I am saving those items for another posting.
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