The Living Wage Issue

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The Living Wage Issue

I thought I would weigh in on this popular subject. First I should say I am a Libertarian Republican. I believe in small government and allowing private enterprise to prosper, which eventually makes things better for all-“a high tide raises all ships”. But I think those arguing on how tragic a rise in the minimum wage would be are misguided.

I did some checking. I found a study done by Berkeley University in California:

I read through it and it seemed properly researched and prepared. It claims to calculate that a rise in the minimum wage would cause a 2.7% rise in the cost of the operating expense of, say, a fast-food restaurant. So I did a calculation of my own. 

I assumed that a typical restaurant would gross $1 million per year (Macdonald’s is 2-1/2 times that) but let’s keep it this way for simplicity. I estimated that such a restaurant would have say, 12-15 full time minimum wage employees or the equivalent. A rise in wage of $2 per hour would cost that restaurant $80 per week per 40 hour a week employee, times 12-15, or $960-1200 per week, or $48,000-$60,000 per year, or 5-6% of their annual sales volume of $1 million. The Berkeley study said the increase would be 2.7% per year. My calculations show double that. 

The company would probably raise their prices to cover this additional cost. So what would such a raise affect the cost of, say, a $3 hamburger? Under the Berkeley study, the price of the  hamburger would go up to $3.10. My calculation-double that, to $3.20. What would this mean? Would those who patronize the fast food joint go eat elsewhere to save money? Where else-these restaurants offer the cheapest priced meals that are to be found? All the competition would be absorbing  the same increase in the labor cost, and, presumably, will all pass the increase on equally. Would the company layoff employees due to the higher labor cost? Hard to believe, if their business remained the same-if they did, who would cook the burgers?

It becomes a matter of opinion. If the minimum wage went up, I think things would go on just as before, except the lowest paid laborers in our society would now have to live on $400 a week, instead of $320 (assuming an increase from near $8 to $10 an hour). Sorry guys, I think you are being greedy, and you should take the higher road, consider your fellow man, and make this happen. Great businessmen not only accumulate great wealth for themselves, but should also take responsibility for raising the standards of their fellow man, who is not born as fortunate as they are. It is only right.

I do not eat fast food-I am a more healthy eater (that’s another topic for the future). But if, when I go to the ethnic restaurants I like, the price of my $22 meal was upped to $23, as a result of a national law giving the lowest paid workers a couple of bucks an hour more, I would not mind. Who would?

I do not agree with Obama on much, but I think he has this one right.