Raising The Federal Minimum Wage - A Bad Idea

We often hear calls from liberal politicians and unions for raising the $7.25 federal minimum wage.  It would be a very bad idea.  First of all, a very small percentage of Americans are actually paid the federal minimum wage because while employers in states and cities cannot not pay less than the federal minimum wage, these localities often have higher minimum wages in place.   Further, many lower skilled, under-educated employees are paid more than minimum wage because of market forces that require higher wages  to attract workers.  So, even fast food companies and retailers that typically pay lower wages are not paying minimum wage to most of their employees.

Minimum wage, which should be defined by states and even locally based on cost of the living for the area, is usually paid to Americans in entry level jobs and often to young people in part time work.   Those who call for a federal minimum wage of $15 an hour, if ever enacted, would be a job killer.  Those in manufacturing jobs in the US are competing with workers in foreign countries that are often paid $5 a hour fully loaded.   Moving the minimum wage up to $15, which would presumably move wages up across the board, would just result in even more jobs being pushed overseas as has been happening for 20 years as a result of union demands for higher and higher compensation and benefits in the US.  About 3 million manufacturing jobs in the US are now overseas because unions pushed and pushed for higher wages and benefits to the point that they made no sense. 

In addition, at $15 a hour companies that cannot off shore jobs, would just bring in more automation.  We are seeing it now as stores like Home Depot and Lowe's now have self check out stands with one employee manning 4 stations.   It would be very easy to turn fast food registers into self service, with the customer placing the order and one employee taking the money for four registers.   If the minimum wage is raised too high, companies will find ways to eliminate labor cost.   So, those that keep pushing for a higher federal minimum wage will do a disservice to the very people they are trying to help.

Higher labor cost would just be passed on to the customer.  A higher federal minimum wage would mean higher prices as Wal Mart and or for goods and services in our country.  It would result in an even lower standard of living for the working poor.  A better idea is improving our education system so that those with little or no job skills, or education gain both so that they will be paid a whole lot more than the minimum wage. 

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