Archive for January 30th, 2007

Minimum wankery.

Jan 30, 2007 in Politics

If you feel like seeing what one jackass can come up with based on his experience managing a Perkins and one single and rather sparse chart, go check out Brian’s latest attempt at “thought.”

If you want to see some actual research and thought from a professional, check out this.

One will note that there is a smaller percentage of people on the minimum wage now than 1997 because in real dollars the minimum wage is 14% lower than it was then. Any employer even remotely attempting to keep up with inflation would be paying more. One might also realize that state minimum wage increases will move faster than the federal minimum wage, since it is impossible for them to move slower.
One might also, if one weren’t an absolute pinhead, realize that while an employer will have to pay his/her employees more, every other employer is also paying his/her employees more. Do you know what the name is for the employees next door? That’s right: customers. Unlike voodoo economics, putting money in the hands of the lower class does a lot more than putting it directly into the hands of the absurdly wealthy. Giving middle-class workers higher wages means that most of that money goes right back into the economy. So when guys like us get money we’re more likely to spend it on a gallon of milk instead, for instance, an off-shore factory.

One could put a lot of things together by looking at the big picture, but Rush Limbaugh and dittoheads like Brian are usually trying to invoke the most selfish feelings in people. Only think of yourself as a struggling business person, and now the wage just jumped $2 an hour. Wouldn’t that be hard on you?

Nope.

Recently, the Fiscal Policy Institute (FPI) released a study of the impact of higher minimum wages on small businesses4. Their analysis focuses on various outcomes for businesses with less than 50 employees, comparing these outcomes between states with minimum wages above the Federal level and those at the Federal level. If the theory that higher minimum wages hurt small businesses is correct, then we would expect there to be less growth in such enterprises in states with higher minimum wages. In fact…the opposite is the case.

Between 1998 and 2001, the number of small business establishments grew twice as quickly in states with higher minimum wages (3.1% vs. 1.6%). Employment grew 1.5% more quickly in high minimum wage states. Annual and average payroll growth was also faster in higher minimum wage states.

And if one actually felt like doing a little lateral thinking, aren’t most of the problems posed by the very fact that stagnant minimum wages necessitate huge jumps in order to catch up with inflation? Going up $2 an hour may seem steep for some businesses right off the bat, but if the minimum wage were designed to increase by a few pennies each year, the burden would be completely painless.

-jb