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Bruce Burleson – July 2, 2018

 

This week Massachusetts Governor Charlie Baker—a Republican—signed a bill increasing the minimum wage from $11 per hour to $15 per hour, an increase to be phased in over the next 5 years. It looks good on paper for lower-income people, but what results are we likely to get?

Supposing a company has $1 million budgeted for salaries. The company can afford 40 employees at $12 per hour with that budget. Now suppose the minimum wage goes up to $15. Now all of a sudden, that same $1 million (which isn’t going to magically increase just because the government mandates higher wages) will only pay for 32 employees. So, the liberal policy of increasing the minimum wage in this example compels the company to lay off 8 workers, or 20% of its workforce. This is basic arithmetic, but the liberals don't get it!

 

The reality is that businesses and nonprofits only have so much money budgeted for staff. For example, one nonprofit I know of in Boston—a provider of services to people with severe mental illness—pays its staff $12 per hour and not a penny more due to budgetary restrictions. What will happen when they’re forced to pay $15? They’ll be forced to reduce staffing levels and will reassign the work to the remaining workers—thereby increasing stress levels, caseloads, and decreasing the effectiveness of the work. The work that these folks do doesn’t just go away just because the minimum wage is on the rise.

 

I myself have managed several nonprofit programs where the personnel budget was fixed at a certain number.  (And it was never a million bucks—don’t I wish!)  If I were forced to increase wages by 20, 30, even 40 percent, it would mean layoffs.  The math doesn’t lie!  Instead of making $11 or $12 per hour in an entry level job, many workers will find themselves on the unemployment line, leaving their former colleagues to pick up the slack.

 

So, when the government artificially raises the minimum wage, it is likely to do more bad than good. And in the nonprofit sector, it will harm the vulnerable people who are cared for, since caseloads will grow thereby reducing the amount of time workers can spend on helping each client.

 

The liberal politicians who artificially raise wages are acting out of purely political motivations.  Feel-good policies such as this mean that liberal politicians get more votes—so that they can be re-elected and then engage in even more harmful economic policies.  The same politicians who sign minimum wage increases into law are the ones who supported Barack Obama’s failed overregulation of the economy—which prevented economic growth and cost jobs.  Nice work, Democrats and RINOs!

 

There is a way to boost wages in general that doesn’t involve liberal policies, and that is to make sure the economy is growing and unemployment is dropping. Wages should be set by the laws of supply and demand, not by Democrat (or liberal Republican) hacks who are acting in their best interests, not those of their constituents.  When the economy is strong, like it is right now, lower-paid workers can re-train for the higher-paying jobs that are emerging.  For example, here in the Boston area, the health care industry is growing.  One need only glance over the listings on online job boards to see that health care organizations are literally screaming for help, and often paying much better than retail or fast food jobs.

 

A strong economy with reduced corporate taxation and elimination of unnecessary regulations—and not government-mandated wage increases—raises the standard of living for all.  And that is why people should support the economic policies of President Trump, not the Democrats.

 

 

    


 



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