That was what I was going to point out - employers have a sort of choice of either bumping all the hourly folks below a certain threshold up to the difference, or dealing with the hostility and dissatisfaction that comes from what is perceived as a relative pay cut by those whose wages didn’t rise, and as an unearned pay raise for people who got more relative pay without being promoted, etc… for it.
It’s not necessarily rational, but it’s how people think.
Take for example, someone making say… 12 dollars an hour today. They’ve likely got that 165% larger pay rate by some combination of having more experience, worked there longer, performed better, etc…
Now let’s say the government raises the minimum to $12 an hour. Is that person going to say “Eh… I still make $12, good for that other guy who just started.” or are they going to feel somehow slighted if the lowest people on the totem pole now make the same as they do, and they don’t make any more?
It’s going to feel like whatever effort was put in for them to have earned that extra pay has been wiped out with the stroke of a pen. Which is also why people get so salty about student loan forgiveness; it does feel more than a little bit unearned if it’s not need-based.
As far as the inflationary aspects go, @Chronos is right- it’s the unevenness of it that gets people. In our example above, if the minimum wage increase causes inflation, that’s going to hit that person who originally made $12/hr harder, as they’ll see that as a decrease in takehome pay, while the person whose minimum wage just got increased won’t quite see it the same way.
Well, from a rational perspective it was just “Here I’m expected to receive shipments, run head cashier duties, be the go-to guy for customer technical questions, etc” vs “There, I’ll make the same money to be ignored while I stock shelves and push a broom”. I wasn’t mad at the lower wage people getting a bump, it just didn’t make sense to carry 3x the responsibilities for the same wages.
Granted, I was younger then and most of my income was for discretionary purposes. I might feel differently if I was 38 years old and trying to feed a kid when this happened. I’d still want more money but would possibly have a saltier attitude about it.
I don’t disagree. From whatever angle you come at it, a minimum wage raise without a corresponding raise for everyone above them up to some point is going to result in a lot of bad feeling and resentment.
There is nothing magical about the dollar. If you reduce its value in the labor market, you also reduce its value in the food market, and the housing market, and the healthcare market.
Raising the minimum wage does not improve anyone’s skillset. It does not improve anyone’s social connections. It does not improve anyone’s bargaining power relative to the rest of the players in the economy.
The important relationship is not between hours of manual labor and pieces of paper decorated with dead presidents. The important relationship is between skilled labor and unskilled labor. Changing the minimum wage changes the measuring stick from English to metric. It does not change the things being measured.
Where I live, an hour’s labor at federal minimum wage will buy you meal at a working-class restaurant. It was so when the wage was $3 and hour, and it is so now.
Minimum wage laws give you the illusion of helping the poor, but out on the street, they don’t change anything. Poverty sucks, whether it is measured in krugerrands or in Zimbabwe dollars.
But what’s a “corresponding raise”? Is it the same multiplier? If absolutely everyone did that, then yes, the minimum wage increase would have no net effect at all. But it might also be a raise by the same dollar amount, in which case it’s a net gain for all of the low-earners. Or maybe it’s a raise for everyone, but only just enough to keep the hierarchy intact. Or maybe a raise for everyone making below the new minimum wage to the minimum wage, and further raises only for those specific employees who complain and threaten to change jobs. And of course, some employers will only raise everyone below the new minimum and just ignore the grumbling and resentment.
In fact, in every scenario other than “everyone goes up by the same multiplier” (which is of course unrealistic, because you’ll never get everyone doing the same thing), the net effect is to, on average, favor low-earners.
21 states appear to be at the Federal Minimum. The West Coast and North East (except New Hampshire & Penn) are all over $13.00. 16 States in all over $13.00 and another 13 over $10.00 at least.
Clearly higher minimum wages are not hurting the economy of said states, in fact it appears these are the states that do better overall. Possibly as more people have disposable income to spend in stores to keep more people employed in retail and the like so they too have some disposable income.
The cost of living doesn’t vary that much though. Even Tennessee to NJ is only about 1.5 to 1, and Texas is one of those 7.25 states, the cost of living ratio there is a lot lower. Also our neighbor Pennsylvania, again not close to 1.5.
Tennessee generally comes up as the cheapest state as I recall, thus why I chose it.
Another factor is that increases in things like credit card processing fees or insurance premiums drives more money towards corporations, which a lot of people are perfectly okay with. “Of course Company X is entitled to charge a market rate for their product! Leaving profit on the table is practically communism!”
The people who benefit most directly from increasing the minimum wage are the hourly employees, and a lot of American society is incredibly biased against those employees. Employers act like the employees are stealing from them just by expecting to get paid for their work, and lots of people back them up on that.
If your employees have to live on significantly less than 100-150k per year why can’t you live on less?
If your business requires you to employ people to function then it should be clear to you that those employees are what allows you to have a business and they should be paid with that fact in mind.
I don’t own a business- but sure , most business owners could live on less than $100K. But why would I bother to open a hardware store if I could do as well working for Home Depot ?
Nothing about exactly how much anyone is paid - an assistant manager at a Home Depot or Lowes where I live is going to make at least 80-90K , store managers will make more. So why would I open and run my own store to make less than $100-150K when I could lose everything I invested in it?
In most large companies with a significant proportion of employees within a dollar or two of the minimum wage, there is often a “compression wave” of wage increases if the minimum wage is increased. Either by contract or by custom.
Say the minimum wage goes from $10 to $11.
People at $10 go to $11, people at $10.50 go to $11.40, people at $12 go to $12.50, people at $13 go to $13.20, people at $15 don’t get any raise at all until the next merit increase cycle kicks in.
You can’t have 10,000 people all negotiating with their supervisors. There’s almost always some kind of process that seeks to avoid turmoil and runaway cost increases.
Though there are many states where this hasn’t been an issue for decades as the minimum wage hasn’t changed.
Without employees running the registers and stocking the shelves and sweeping the floor . . . you don’t have a store that puts any money in your pocket.
Kind of a hijack but…@Joey_P as a small business owner do you wish we had a universal health care system that is a contract between citizens and the government, and not something that is typically the responsibility of the employer?
I feel like health insurance is such a menace to the bottom line of almost any company, and moreso for smaller companies that have to offer it to compete, even if not required. I have never understood why small businesses, and local governments (from a business perspective) don’t rally for universal health care.
Higher wages come with higher cost outlays for businesses, but also puts more money into the pockets of people who will spend it. Health insurance costs just suck money out of everyone.
