The laws of economics are similar to the laws of physics, they can’t be broken. For economics, the driving force is simple mathematics. For my whole life, liberals have continually beat the drum for a higher minimum wage counting on the fact that the average Joe just doesn’t understand the implications of raising wages. When I started working the minimum wage was $1.00 per hour, not because government said so but because the job market said so. More about that later. In Montana before COVID, the minimum wage was about $8.00 per hour. In 2023, it will be near $10.00 per hour. This year the brain trust in California is proposing $22.00 per hour.
For my illustration we are going to use nice round numbers to keep the math simple. Also, I will only address employee wages and not consider any other costs that would increase. We will look at a fast food hamburger restaurant. My restaurant has four classes of employees. A custodian who cleans bathrooms, floors, parking lot, and takes out the trash, a minimum wage position. Then we have hamburger flippers who make and deliver the food to the customer, another minimum wage position. Then there is a shift supervisor, who is paid minimum wage plus 50%. And lastly, there is the restaurant manager who is paid twice minimum wage. In addition, the owner of the store has to pay government benefits equal to about 20% of the employee’s wages (could actually be as much as 35%). For simplicity, we will only look at the cost of one hour for one employee of each category with the minimum wage being $10.00 per hour.
Custodian: $10.00 plus $2.00 for benefits costs $12.00
Flipper: $10.00 plus $2.00 for benefits costs $12.00
Shift supervisor: $15.00 plus $3.00 for benefits costs $18.00
Manager: $20.00 plus $4.00 for benefits cost $24.00
Total hourly cost: $61.00
Under this cost structure, a plain hamburger costs $2.00, or 3.3% of the wage cost.
Now in our benevolence, we demand that the minimum wage be increased to $20.00 an hour. The supervisor can’t earn less than the flipper, and the manager can’t earn less than the supervisor. Let’s see what that does to the cost of the hamburger.
Custodian: $20.00 plus $4.00 costs $24.00
Flipper: $20.00 plus $4.00 costs $24.00
Supervisor: $30.00 plus $6.00 costs $36.00
Manager: $40.00 plus $8.00 costs $48.00
Total hourly cost is now $132.00
Minimum wage has been a smoke and mirrors ghost tool politicians use to gain power
Under the new minimum wage cost structure, the hamburger now costs $4.36, which is still only 3.3% of the wage cost.
How, exactly did the employees really benefit from the minimum wage increase? Although the employees got a 100% raise, it now cost the employee 118% to buy one of the hamburgers. It is pretty clear the employees actually lost real buying power. The minimum wage has been a smoke and mirrors ghost tool politicians use to gain power (i.e., buy votes) because it sounds like such a good idea. Please remember, that my simple illustration does not take into account the impact of the cost of a higher minimum wage for everyone that gets the raw material to the restaurant.
Now for the rest of the story. Back when I was earning $1.00 per hour, a hamburger only cost 15 cents and a quarter would get you the fanciest hamburger in the place.
Politicians always try to sell increasing minimum wage because no one can raise a family on it. First, that’s a lie. Many fine people have been raised by the family bread winners working for minimum wage. It isn’t easy, but there are too many examples where people have done it. In the normal situation minimum wage jobs serve as entry level jobs for people in the workforce to learn new skills so they can move up the income ladder. In our example, a burger flipper moves up to supervisor, a supervisor moves up to manager, and a manager becomes a restaurant owner. It happens all over America.
However, it must be acknowledged that for numerous reasons there may be minimum wage earners who never move much above that level because of physical or mental limitations. They can be very good at what they do, but these jobs provide the opportunity for them to know they are contributing.
Inevitably raising minimum wage is a fantasy to make the virtue signaling woke do-gooders feel good and politicians get rich while actually hurting the people they claim to want to help. In reality, it is just another Marxist liberal Democrat hustle to achieve their agenda.
In 2022, wages are nearing $20.00 per hour to try to attract workers. It isn’t rocket science to see with your own lying eyes what this has done to fast food and restaurant prices. You just need to believe what you see; it is no more complicated than that.
After a 55 year career as a professional pilot in the military, in law enforcement, in the private sector, and in federal civil service, I am now retired.
In many of these positions I repeatedly took an oath to defend the United States Constitution against all enemies foreign and domestic.
