Thursday, January 11, 2007

Minimum wage hike passes House

...and on to the Senate.

After a heated e-mail exchange with a longtime friend on the minimum wage, we both came to two conclusions:

1) True, raising the minimum wage does increase costs, but if your business were to buckle under from such a small increase in costs, chances are it was going to buckle under anyway. Such a small profit margin cannot substain a business.

2) Though your employees are now taking home a greater share of your profit, your customers are also taking home a greater share of their employers' profit, resulting in more money available to spend at your business, and thus rising costs are balanced by rising profits.

The option of letting the market even things out does not take into account local economies. It does not take into account businesses who have no intention of letting the market resolve their finances if they can do it for less. Wal-Mart is famous for playing cities against each other to see who can give them the sweetest deals in terms of tax breaks and anti-union laws.

Maybe in 10, 20, 30 years the market will usher in a competing company to a town with better wages and benefits, but the voters did not elect representatives for help in 30 years. They want help, often need help, yesterday. Free-market economics is not a high priority.

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