What happens when you raise Minimum wage
Who pays minimum wage these days?
Grocery stores, gas stations, supermarkets,department stores and a hardware stores. To begin with.
If you owned any of those businesses and you have an average yearly profitable income of say $100,000. Which is a nice income. You have achieved a nice status finally.. Right? Now say your business has a yearly gross income (before overhead,restock) of say 450,000. Take out what you spend every year on supplies and groceries to the store. $250,000. You are left with $200,000 to split between you and your employees. Who each make $8 an hour. You have 6 employees. They each make a few cents more than Minimum wage right now
Now someone steps up and smiles to the crowd and waves slowly to the people and says ” Let’s raise minimum wage to $9 across the country!!!” .. and then it happens.. They do it.
Now your employees are making minimum wage. but where does that extra dollar an hour per employee come from? Do you take it from your total? I mean you mastermind the whole damn company from a garage sale to a small grocery store, you do all of the back scene work, you pay the the sales taxes , the property taxes, take care of wages and ordering of restocking your shelves. You might wish you could. but why would you? It’s yours. Your 20 years of growing that company to make enough money to employ 6 people at slightly more than minimum wage. why would you take from your own pocket?Heck no. You just promised your daughter you would buy her that Volvo the neighbor is selling. and your son just got a girlfriend and wants to take her to a movie eventually. Your wife hates that Diy expansion you tried to do on the house that leaks wind and rain so you have to call a professional before the house breaks in half. Heck no you don’t dig from your own income to pay this and you can’t steal from the company’s income, or that would kill the company and keep it from growing and employing a larger group of people. Especially when all you have to do is raise your prices on your products so that your company’s average daily income, exceeds the new cost of daily overhead. so that you keep a steady income.
Reality of the change
The known fact of this, is everyone will raise their costs. There is not one single company that will not be forced to raise their prices. If you think that just the store you buy from is raising their prices and are evil tyrants. You might want to pay attention to the line from production to sale.
Manufacture raises price to cover new cost
Shipping to distributors raises cost to cover new cost from manufacturer, and new cost in fuel and the cost of employees.
Now it hits the store and the price gets raised to cover raised fee from manufacturer, distributor’s fuel and employee overhead. Now it hits your hands and the price now covers 4 people’s income increases. Which now makes it even harder to purchase than it was before the raise in minimum wage.
Now look at how many times that item has been sold at a greater cost before it gets to you. now look at all of the incomes that have increased before it gets to you. Each one of those incomes are in a higher tax bracket, and sales tax on a more expensive item is greater.
It would be easy to digest this if you only had to buy one item. but no. You are a human and need… NEED more than one item. Milk, Toilet paper,Gasoline, Bread, Shoes etc. Everything gets a price hike like this. and it’s not just 1-3 pennies per item that gets this hike. It’s 1-3 cents per employee who handles said item. So by the time it gets to the store, the item has now gone up 12 cents. Your weekly groceries go up from $50 a week to $56. Medical insurance from $32 a week to $37 a week. Your gasoline goes up from $35 to $45 a week. Your electric bill goes up from $80 a month to $88 a month. Car insurance goes up from $88 a month to $95 a month. and your 99 cents value menu just jumped to $1.09 and item. In the end, after all of the things you normally buy, you are now digging deeper in your packet to buy it all because of the increases in all of your items. You are now further in debt than you were before. because the cost of living increases in excess of your new budget.
The only one to benefit in the end, is the person who raised the taxes, and YOU the minimum wage employee are struggling harder. because gas prices are higher on you. Grocery costs are higher on you, and you still have a life you want to better. It isn’t though.
For further knowledge
Here’s some resources
National Average Incomes If you were wondering.
Average American home costs.
If you will notice, incomes 1963 compared to recent, and the cost of a home in 63 and recent.. End result is, cost of overhead increases cost of products across all fields.