There has been a lot of talk about minimum wage laws coming out of the federal government lately. The proponents say that all companies must increase the pay they provide their minimum wage employees. There is no perspective given as to what these laws will do to those employees and the employers who must pay these new wages.
Some states, those entities that are the closest to the people, have larger rates than the federal wage floor of about seven dollars an hour. This occurred with only a small increase in the unemployment rate. When the federal government mandated the seven dollar an hour rate, the unemployment rate spiked because it applied to all people, everywhere. Now they want to take it to over 10 dollars an hour.
Free markets decide what an employee, just starting out, should be paid. Their expenses are balanced against their income and plans for expansion. If their expenses, such as employees expenses go up, something else has to be done away with or severely cut back. Starting employees who make the minimum wage represent only about four percent of the work force and this dislocation, as arbitrary as it is, interferes with the operation of the company.
Legislators, working in Washington, DC, do not have payrolls for which they must be responsible. Many of them never have and do not understand how raising all employee expenses, for any company, impacts their ability to be flexible. All of this nanny state interference comes from the belief that all private companies have slush funds that they can dip into whenever new taxes are imposed.
By discriminating teenagers from being hired, the new rate will have employers looking for older, more experienced workers. These potential employees provide more value than a new person getting started. The new wages that would be set by Federal authorities do not take any input from these businesses. This is because this input is counterproductive to their ideas about how the market should run regardless of how it actually does work.
When the minimum pay for a new person is arbitrarily raised to be at or above the supervisors pay, there are internal problems with employee morale. They will have to be raised in order to provide the pay difference which will further deplete any retained earnings and future growth plans will be put aside. Every other position, above them, will have to have adjustments made and it can become complicated and expensive quite quickly.
Since the new pay rate does not take into consideration the new employees lack of skill and experience, it does nothing to increase productivity. New employees start at the beginning rate and do not stay there long. They either increase their skills and gain additional experience to become more valuable or they do not and are laid off or terminated.
The largest problem with these federal laws is what they do for people who do not even work at those wages. Most union contracts are based on a factor of the minimum wage in the area. By raising the wage to an unsupportable level, union contracts, already extremely confining to many companies, will be even more so as they use the new rates to demand more pay for their members.
Some states, those entities that are the closest to the people, have larger rates than the federal wage floor of about seven dollars an hour. This occurred with only a small increase in the unemployment rate. When the federal government mandated the seven dollar an hour rate, the unemployment rate spiked because it applied to all people, everywhere. Now they want to take it to over 10 dollars an hour.
Free markets decide what an employee, just starting out, should be paid. Their expenses are balanced against their income and plans for expansion. If their expenses, such as employees expenses go up, something else has to be done away with or severely cut back. Starting employees who make the minimum wage represent only about four percent of the work force and this dislocation, as arbitrary as it is, interferes with the operation of the company.
Legislators, working in Washington, DC, do not have payrolls for which they must be responsible. Many of them never have and do not understand how raising all employee expenses, for any company, impacts their ability to be flexible. All of this nanny state interference comes from the belief that all private companies have slush funds that they can dip into whenever new taxes are imposed.
By discriminating teenagers from being hired, the new rate will have employers looking for older, more experienced workers. These potential employees provide more value than a new person getting started. The new wages that would be set by Federal authorities do not take any input from these businesses. This is because this input is counterproductive to their ideas about how the market should run regardless of how it actually does work.
When the minimum pay for a new person is arbitrarily raised to be at or above the supervisors pay, there are internal problems with employee morale. They will have to be raised in order to provide the pay difference which will further deplete any retained earnings and future growth plans will be put aside. Every other position, above them, will have to have adjustments made and it can become complicated and expensive quite quickly.
Since the new pay rate does not take into consideration the new employees lack of skill and experience, it does nothing to increase productivity. New employees start at the beginning rate and do not stay there long. They either increase their skills and gain additional experience to become more valuable or they do not and are laid off or terminated.
The largest problem with these federal laws is what they do for people who do not even work at those wages. Most union contracts are based on a factor of the minimum wage in the area. By raising the wage to an unsupportable level, union contracts, already extremely confining to many companies, will be even more so as they use the new rates to demand more pay for their members.
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