There are so many things wrong with this article it is hard to know where to begin. But I will focus on his assertion that if we raise the minimum wage we will have less poor people living on food stamps. He says a lot of things, but this is his main idea. Let’s run a thought experiment since Mr. Creamer has no imagination. I am going to focus on small business owners. This is the group most likely to be affected by minimum wage and is ignored by Mr. Creamer.
You are the owner of a small company that employs 5 people at $7.25 per hour, the minimum wage. Each of your employees is paid $290 per week before taxes, thus the wages you pay out weekly are $1450. Now imagine the minimum wage is raised to $9.00 per hour. This raises your employee’s wages to $360 per week before taxes and the wages you pay out weekly to $1800. The difference here is $350 per week, $1400 per month or $16,800 more per year to pay employees. Where is this money going to come from? What does Mr. Creamer think the owner is going to do? He doesn’t tell us. Here are some options:
The owner could cut his own salary and pay the employees more. In a small business this is probably not feasible. More than likely the small business owner is living on a very tight budget. Sure he has more than the minimum wage worker, but he is also the one putting up the capital and investing the most time into the business. He has the skills and expertise to run his company. Cutting his own salary is not going to happen nor should it happen.
He could fire one minimum wage employee to compensate for the lost revenue. I am not sure how this helps make less poor people. Instead of five poorly paid people you have four a little better paid and one not paid at all. At best, it seems like a wash.
He could raise the price of his product or service, which would either hurt his business because he sells less or it hurts the buyer because it now requires more money to pay for the same product. It is hard to see how a more expensive product helps the economy, the employees, or the small business owner.
He could pay his employees less than the minimum wage under the table, thus breaking the law and helping his employees break the law.
$16,800 more in forced expenditures per year would kill many small business owners putting more people below the poverty line. Mr. Creamer is all worried about trying to get the millionaires to pay more. But despite the way he sounds, he has no concern the average wage earner or the average small business owner. Under his plan these two groups would be destroyed.
When you think about it, which Mr. Creamer clearly did not do, you realize how facile and naïve his suggestion is. Maybe he should pick up Henry Hazlitt’s book Economics in One Lesson. It might help him think through the big picture instead of just trying to find ways to take money from the rich.<>
