Monday, January 25, 2016

Raising The Minimum Wage Will Help (Not Hurt) Businesses

I have always loved the Doonesbury cartoon strip. It highlights many political issues, and does it in a humorous way. And that is just as true in this latest cartoon (see above). This one points to a mis-perception about raising the minimum wage.

Few could argue that a substantial raise to the minimum wage would lift many workers out of poverty, or that it would boost the economy overall. But there is a rather widespread idea that raising the minimum wage would hurt American businesses. The Republicans love this argument, and they'll be quick to tell you that raising the minimum wage will drive many companies out of business because they would no longer be able to compete.

Not true. If only one business raised wages, and their competitors did not, they might well not be able to compete. But that is not what is proposed. The proposal to raise the minimum wage would affect all businesses, and when all businesses have to raise the wage, competition would not be affected.

Now I'm not going to tell you that no companies would go out of business once the minimum wage is raised. But it won't be because of the higher minimum wage. There have always been businesses that failed. It happened in the past, and it'll happen in the future. But the reasons for those failures lie with bad planning, bad service, or the offering of a product/service the public doesn't really want.

Raising the minimum wage to a livable level would, in spite of what Republicans want you to believe, help businesses to be more profitable. In a capitalist economy such as ours, businesses can only sell what their customers (the American public) can afford to buy. If the public can't afford to spend money, then businesses will suffer.

That is the problem with our economy right now. The middle class is shrinking. Too many of the new jobs are low-wage jobs. And those with a good job find their wages stagnant as inflation increases the cost of nearly everything. This means that, while the rich have plenty to spend, the buying power of everyone else sheiks with each passing year. And when that buying power shrinks, people are unable to buy as much as they once could -- and that causes businesses to suffer (and the economy to stumble along, at best).

Putting more money into the pockets of low-wage workers would mean they could buy more products/services. And their higher wage would provide pressure to raise the currently stagnant wages of those making more, and they also could buy more products/services. And who benefits from that extra buying? Businesses do. Their profits would go up substantially because of the new spending, and would easily exceed the increase in labor costs.

In short, raising the minimum wage would benefit not just the poor, but everyone in our society -- and the biggest benefits would go to businesses. That's not liberal dreaming. That's solid business economics. When people have money to spend, businesses flourish. That's just the way a capitalist economy works.


  1. Who cares if cares if a company can't compete if the minimum wage is raised? If the demand is strong enough then they will be replaced by a new business with better service, better planning and a better product, that can compete. And if they are not replaced then market wasn't strong enough to support that many businesses in the first place.

    They don't even believe their own free market BS!!!! They make me sick.

  2. You should ask all the rePUKEians you work with..."do you support the minimum wage at $15 or keep it at $7.50???' When they say no minimum wage hike!!!! Tell them OK, I'll let management know that you only think you should have your $25/hr reduced to $7.50/hr.


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