Good Reasons to Raise the Minimum Wage

Raising the minimum wage increases efficiency, has no effect on inflation, and has no effect on unemployment.

The big objection we hear to raising the minimum wage is that it forces small businesses to fire workers because those businesses cannot afford the increased costs. It must, therefore, raise the unemployment rate. In fact, raising the cost of labor forces small businesses to do what they should be doing anyway-becoming more efficient. I was a small business owner. I could just afford one worker, but I paid her well over the minimum wage and demanded a lot from her. She came through. She was worth ten minimum wage workers. Small businesses can handle the extra cost by becoming more efficient and by asking more of their more fairly compensated workers. If you pay someone more, you tend to invest more in them in terms of training; you give them more responsibility. You look at them more as an asset, not as a liability.

Inflation is the next objection. All that extra money in the economy will fuel inflation. The fact is that the real inflationary threat is not workers' salaries, which have not kept parity with the inflation rate for years, but higher fuel costs. We suffered a lot under Jimmy Carter when OPEC raised oil prices; salaries at McDonald's had little to do with it. And why should being poor and pulling out the credit card be better for the economy than earning and spending a little extra money? The small raise in salary will help the economy, not hurt it.

Our real problem in this country is not unemployment. It is under-employment. We have been exporting our skilled, manufacturing jobs overseas and expecting our workers to live on service jobs. When will businesses wake up and realize that sooner or later, if everyone has to limp along on low quality jobs, there will not be enough spending to fuel the economy? Sooner or later the credit card companies will stop lending, even at the criminally high rates that they currently charge.

Finally, who can fail to notice that it is the Wall Street types who cry the loudest when poor folks look like they might get a raise? It is the same Wall Street types who applaud when major corporations fire thousands of people to streamline. It is the same Wall Street types who cheer when businesses fire American workers and replace them with Indonesians or Chinese overseas. Why is it that these types don't complain about the inflationary impact of CEO salaries?

The answer is pretty simple. All of their charts and technical analyses are designed to make money for those who are already wealthy. And one way to do that is to squeeze the workers who are already at the bottom.

Give these folks a break. They need it.