Dear Minimum wage advocates,

I’ve kept my tongue still in the Minimum wage increase debate, mostly because I don’t want to come across as insensitive. However, I must say, for once I’m not with the Democrats on this one. It sounds ethical to increase minimum wage and afford minimum wage workers a better standard of living. Problem is; in a capitalist market, ethics and economics don’t exactly go together. We could sit here and argue that CEOs, CMOs, and CFOs can easily take a pay cut from their fat bonus checks, then redirect the extra cash to higher payroll cost, but who are we kidding? This is democracy not socialism. Big execs are entitled to their own free will and large paychecks! Now the real issue is what happens to the little guys like me who employ minimum wage workers? There’s no huge bonus check to take a pay cut from!

I’ve been ethical in the past. I did pay a little above minimum wage to my minimum wage employees, and what I couldn’t make up for in cash, I made up for in the added value benefits I gave my employees. If payroll cost goes up for folks like me, I have no choice but to break-even by increasing pricing, cutting expense somewhere else, working 15million extra hours to raise sales levels and spread the cost somehow, or just cut jobs to make sure I don’t go under. Again, we could sit and say, better pay means more disposable income and better standards in society, so everyone will start spending money and there’ll be plenty to go around. As beautiful as that hypothetical scenario sounds, the free market doesn’t really regulate itself. Entrepreneurs make decisions on profit projections, and accounting says higher payroll cost equals reduced profit projections if you don’t tweak something else!

In the end, a society with higher wages does look like a thriving economy, but we all live as we earn. We earn higher wages so we can afford the rising cost of living. Ask England and Denmark, they’ll tell you higher payroll is not without its cost. I would know, cos I did give up an English life with higher wages and a stronger currency for the big roads, big cars and big houses America offers. The bigger question is; have we done anything tangible by raising minimum wage to a specific dollar amount, when the kickback effect means we end up distributing the cost of that hike to society at large? Or are we just playing politics and shifting numbers around to make things look like “We truly care about the little guys”. Yes a society with better wages does seem like a thriving economy, but a consequential rising cost of living is called INFLATION. Maybe they’ll call ours Hyperinflation. We could always ask Germany what hyperinflation feels like. Then again, maybe that’s what we want. I mean inflation allows for the Feds to intervene in the market, right?

Now just incase you’re wondering how does this really affect me? I don’t have any minimum wage employees. Well think about it this way; the average cost of living for an American per year according to the bureau of labor statistics, is $20,194. You’re 35yrs old, you have 30yrs to go till you retire, and you think maybe if I saved up $1million I could retire comfortably, right? Well inflation is currently edging on 4%. Fast forward 30years, and 4% inflation rate means average living cost is now $65,429. Which means the $1million dollars you thought would be enough would only last for an average of 10yrs if you lived on bare basics. Which again means you’re 75, broke as fuck, your hip hurts and you need to get a job!

Hey, these are just my opinions, I’m a numbers person and I like evaluating my options carefully. I could be wrong, I could be right. But the laws of economics and accounting unfortunately weren’t built to be flexible. We can play the numbers game all we want, but I don’t have the money to pay extra payroll cost. I may have it someday, but I don’t want to be forced to do it when I can’t afford it.

Advertisements