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Snowball effect of minimum wage hike | Letter
I have a few questions for Mr. Levy regarding his Dec. 27 letter “Mr. Federal Way draws erroneous conclusions.”
Do you have any studies that show what happens when you give a 65 percent wage increase? I have a feeling that would have a bit more of an impact than an 18 percent increase.
Why would employees become more productive? People who work for minimum wage are not typically the type of worker who is going to be very productive. And what makes you think that turnover will go down when the minimum wage worker can quit and go to another job to make the same minimum wage that they make at their current job?
If a single company pays better, then you can pick and choose who you want to work for and get the best job. When everyone pays the same $15 per hour, you will get the same quality worker that you get now.
When a company produces a product, the cost is a combination of their materials, labor and other fixed costs (rent, utilities).
If your labor goes up, and it goes up for your suppliers as well, then that means that your materials costs and labor costs both go up. So the price of your products has to go up to cover your costs.
You may want to say that your workers will be more productive. Not sure why someone who gets a 65 percent raise is going to magically become more productive, but fine.
If they are 50 percent more productive, then you can get rid of one-third of your work force and still produce the same amount. So now one-third of your workforce is unemployed.
And what happens to those higher quality, more productive workers that are currently making $15 per hour?
If they are more productive, and a better worker, do you think they will want to make minimum wage again?
They will need a raise to $20 per hour. So any products they make will have to figure in that additional cost and will result in higher prices.
What about the guy already making $20 per hour? He is not going to want to make the same as some skilled laborer, he is going to want a raise to $25 per hour.
So all you basically will do is reset the wage levels for labor in the U.S. Sure, some people may be able to afford more because many products come from China, and they will not be raising their wages to match us.
So low-wage workers will be able to afford some of those products, at least until even more jobs move to China because the cost of labor in the U..S has just been increased, making it even more profitable to move offshore.
And what happens to those workers that lose their jobs to offshoring?
I guess they can join all of the other out-of-work people getting government assistance.
Jim Stumbo, Auburn