Warren said “If we started in 1960, and we said that, as productivity goes up — that is, as workers are producing more — then the minimum wage is going to go up the same…And, if that were the case, the minimum wage today would be about $22 an hour. So, my question … is what happened to the other $14.75?” Obviously, Senator Warren believes that the greedy capitalists stole the missing wages. With her insane comments, the Senator sounds perfectly suited for a position in the next communist Politburo.
In contrast, President Obama’s proposal to increase the minimum wage to $9 per hour seems reasonable. Of course, economic reality is not something liberals like Senator Warren and President Obama care to understand. The current minimum wage is $7.25 per hour and our nation’s employment situation is downright scary. There are currently about 90 million Americans not participating in the nation’s workforce. In the last labor report, while 236,000 new jobs were created, 269,000 people left the workforce entirely. In effect, even though the media sang a positive tune about the numbers, we fell further behind.
Mandated higher wages will just make this employment situation worse. In our economy, the vast majority of jobs are created in small businesses. With a higher minimum wage, $9 or $22 per hour, many small businesses will be forced to close their doors.
The typical small business owner operates on a very tight profit margin. Additional labor costs will be prohibitive for countless small businesses throughout our country. Those that are able to remain open will only pass on the increased costs to their consumers, leading to higher prices on everything from a hamburger to a Big Gulp.
A higher minimum wage will also result in diminished hiring, thus increasing the already high unemployment rate. Other workers who are currently employed will lose their jobs as business owners try to adapt to the higher minimum wage.
While Senator Warren’s proposal seems outlandish, others are advocating even higher minimum wage levels. A University of Massachusetts professor, Arindrajit Dube, recommends a $33 per hour minimum wage. Yet, if a higher wage level is so beneficial, why should our nation’s leaders stop at $22 per hour? Why not mandate a minimum wage of $220 per hour or $2,200 per hour? Better yet, how about a million dollars per hour? Let’s create a nation of billionaires!
This kind of economic insanity occurs when liberals try to solve problems like “economic inequality.” The best way to help people succeed in this economy is to dramatically reduce government regulations and allow American business owners the ability to operate without undue interference. Less bureaucratic red tape will lead to more economic activity in the private sector, more jobs and ultimately higher wages. We should let the free market set the minimum wage level, not the government.
There is ample evidence that this type of government mandate clearly does not work. The three states with the highest unemployment rates (Nevada, California and Rhode Island) all have state minimum wage levels which are higher than the federal rate.
The next year will be very challenging for small business owners struggling to deal with higher income tax levels and the increased costs associated with the Affordable Health Care Act.
The last thing we should do is burden these business owners with a higher minimum wage. Instead, we should remove the minimum wage entirely.