The debate in California over whether to raise the minimum wage has really heated up over the past few days.
First the California Republican Assembly unveiled
radio ads targeting Republican State Senator Abel Maldanado (who’s also running for controller) for carrying Governor Schwarzenegger’s bill to raise the wage by a dollar an hour. The ads are running in Maldanado’s home district so that constituents can call him and set him straight.
Then yesterday and today, respectively,
Senator Bob Dutton and
Former Assemblyman Tony Strikland (who’s running against Maldanado) authored pieces opposing any increase in the minimum wage. It has created a rift in the GOP between the liberal Republicans and the Conservative Republicans.
I will have more on the minimum wage issue in an upcoming full length column because I find the issue interesting, but I will say right now that this is really common sense to me: If you force a business to raise the wage it pays it’s employees, one of four things will happen:
A. The business will just suck up the cost.
B. The business will pass the cost on to it’s consumers.
C. The business will lay off some workers in order to pay the rest the prescribed wage.
D. The business will just close up shop because of high operating expenses.
Of course, there are a ton of legally questionable things that the business could do (like hire illegal immigrants) but let’s assume that this company is ethical and wants to strictly obey the law.
Option A is of course what proponents of the minimum wage think will happen. However, in many cases that is simply not possible. The business doesn’t have the resources to just suck it up, so they have to look to another, less attractive alternative.
Option B would raise the cost of goods for all consumers, including those who have the least. The employees would earn more, but they would have to pay it right back when they go to the grocery store because milk now cost 10 cents more. So it really doesn’t help anyone.
Option C would be great for those workers who are fortunate enough to keep their jobs. However, the rest of the employees would be looking for other work. They would be receiving no wage at all.
Option D would be bad for everyone. Instead of receiving whatever pay they earned prior to the mandated raise, all of the employees of this company would now be receiving no pay at all. Now tell me, how is that good for them?
So you can see, this is really a common sense issue when you look at it; minimum wage increases hurt those who they are supposed to help.