Economy Woes: Where's the Source?

Economists have been claiming for a while that the minimum wage has little to no influence on inflation. I say they are wrong. Minimum wage is comparable to that of a price floor. Wages are costs, just like pens, paper, electricity, work gloves or anything else that is needed to operate a company. In general, you would think that minimum wage only affects the small percentage of people that work for those wages (usually places like fast food restaurants and grocery stores who hire high school students). This assumption, however, would be very wrong. Anytime the minimum wage is increased, everybody wants a pay increase. With more money circulating in the hands of the consumers and increased costs of producing products (due to increased wages), products are then sold at higher prices. Earnings increase and costs of living increases (even if it does lag by almost 2 years). Any way you slice it, that's inflation and the vicious cycle continues. Unions are largely to blame.

Unions had their need in history. There was a time when workers had few rights and there were no government oversights and regulations to ensure worker safety and equality. Unions filled this need and organized workers into a pseudo mini-government that allowed them to act as a single unit. This, in turn, gave workers a stronger hand in how they were treated, the type of compensation they received, etc. Times, however, have changed and the need for unions has passed. Workers at places where unions persist (largely manufacturing industries) are among the best paid, safest, and well treated among those of the same education/skill level. Unions are constantly pushing now, for higher wages. This completely, irresponsible act increases costs and decreases stability within the same company they work for. Through the '70s, '80s, and '90s, this was never an apparent issue. However, in this new century, union workers are beginning to see the backlash of all of their pushing. Companies are allowing workers to strike for months at a time before agreements are reached, which allows them to save costs on labor during those periods. The workers, in the meanwhile, suffer at the expense of their union's arrogance. Union workers, however, are not the only ones that suffer. Increased costs are (despite what economists say) always passed on to the consumer. It may happen indirectly, but it does occur nonetheless.

Still worse, many companies have shut down their local operations altogether and have shipped the facilities overseas where wages are far less then what are paid in the United Sates. This has caused thousands of local jobs to be lost! Another large issue related to wages is using illegal immigrants, which is a hot topic right now. These immigrants are willing to work for less then minimum wage. This allows companies to pass the savings on to the consumer and help them gain a competitive edge. Unfortunately, these jobs are often times taken from nationalists who actually lives and has a right to work in the country.

So what do we do about it?

The solution is actually quite simple. We remove the price floor. Even the lowest paying jobs generally pay over minimum wage (generally $0.25 or better). So, simply eliminating the minimum wage isn't going to have an effect or anyone who is currently working. What it would mean is that the next employees could be hired in at lower wages. These costs could then be passed on to the consumers to create increase competition with similar businesses. Companies would be more willing to not send their business overseas and save on transportation costs. Unions must stop pushing for higher wages and companies have to start setting more realistic wage rates.

So what if you are not making the money you would like to?

Get another job. In this day and age, it's not uncommon for people to job hop. Learn a higher paying skill or take a course once a semester at a local community college or technical/trade school. What you want is for companies to bid wages on you. When you have multiple companies making you offers you're in the winners seat. Let's face it; there are people out there that will never amount to anything because they do not have the drive to obtain it. You cannot let that give you an emotional excuse to hang on to the minimum wage policy. It's hurting the economy, it's hurting the person it's intended to help (increases in cost in living), and most importantly it hurts you.