There is a concept called unintended consequences. I cannot believe how many people don’t get it. When you impose a rule there are natural consequences. Like in chess, if you don’t foresee those consequences you get unintended consequences.
I’m reading this guy’s Facebook post saying that $15/hour for minimum wage is justified because the big CEOs (of companies like McDonald’s) make too much.
Do you think raising the minimum wage will result in a lower salary to Steve Easterbrook (CEO of McDonald’s)?
According to the Chicago Tribune, Easterbrook makes $1.1 million. So what? That’s what the board of directors is willing to pay him. I see no problem with that when you’re running a company as big as McDonald’s. But, if you think raising the minimum wage is going to result in a lower salary to Easterbrook, then you’re quite naive.
According to the Inquisitr, McDonald’s is going to add automated kiosks so they can reduce employee counts and thus, offset the loss due to a $15/hour minimum wage. Unintended Consequences!
Authoritarianism is alive and well in government. Force a company to pay $15/hour and that will solve the problem.
Define the problem?
One of the arguments I’ve heard is that people can’t live off $9/hour (current New York minimum wage). That comes out to $1584/month. If I were single, living here in Palmyra, making $1584/month, I could make it work. … oh, wait.. except for Obamacare which would cost me about $450/month. But wait! I could pay the $750/year penalty and still make the $1584/month work.
Aside from that, why do we suddenly think that someone should be able to make a living off a minimum wage?
Why? Because politicians say so.
We have an authoritarian wage, an authoritarian medical insurance requirement and we have welfare.
Why work for $15/hour when you can get welfare?
Another unintended consequence is welfare and its unintended consequences. There’s a popular article going around about a guy who rents to an unwed mother of two, and because she qualifies for welfare, the county pays her rent. He moves in with her along with his child, and now they both co-habitate, both qualify for head-of-household tax credits and so forth. In the end, they are making a comfortable living… off welfare. Forget minimum wage.
Actually, this is several ideas. Here it goes…
- Instead of a minimum wage, require corporations to include their employees in profit sharing plans. (While, I’m against ANY government involvement in business, at least this one has motivation and merit.) Profit sharing formulas would have to include hours worked, shift worked, etc.
- Unintended consequences: supervisors might be tough of slouchers because they impact the supervisor’s profit sharing too.
- Unintended consequences: Coworkers would be tough on each other because if a coworker slouches it impacts your profit sharing.
- Unintended consequences: Customer facing employees will be nicer to clients so clients spend more money thus increasing their profit sharing.
- Change welfare to a work-for-food program. No more EBT cards or money for food. Instead, if you go on welfare, you will be required to put in X hours a week before your receive your food. Your food would be received in the form of staples: milk, flour, eggs, meat, butter, cheese, vegetables in season, fruits in season, legumes, etc. Thus, if you want pancakes for breakfast, you can make them from scratch. It would not include sweets, candies, alcoholic beverages, sweetened beverages (like soda, juice, etc.), etc. Food would come in clearly labeled packages that says, “WELFARE FOOD – To exchange this food for goods, services or money constitutes a crime. Violators will be disqualified from the welfare program.”
- Unintended consequences: People who don’t like the welfare food might consider getting a job so they can buy other foods.
- Unintended consequences: People who don’t like having to work for their food can stop working and not receive any food.
Who pays if minimum wage goes up to $15/hour. Well, we all do. If it cost me $10 to produce a widget, and of that $10, $3 is 20 minutes of a $9/hour employee, and now I have to pay that employee $15/hour, the $10 widget is now costing me $12 to produce. And, if it cost me $10, and I sell it for $25 (250% markup factor), I will now be selling it for $30.
That’s simple math. That isn’t an unintended consequence. That’s the logical, natural consequence.
But, to think I have to eat $2 out of each widget sold is absurd. If I made $1 million a year making and selling widgets, and you cut in to my profit margin, I’m not going to say, “Oh, my, our production costs have gone up 20% and so I’m going to have to take a cut in pay.”
No, I’m not going to say that. I’m going to turn to my production staff and finance staff and ask, “What do we need to do to bring our profit margin back to normal?”
They might suggest raising the price (as I’ve already demonstrated), but at the risk of selling fewer widgets, they might say, “We can lower the production cost if we layoff 50 people.”
Now, there’s an unintended consequence… again.
In the End
In the end we’ll survive a raise in the minimum wage. Our quality of life might not be quite the same, but we’ll survive. We probably won’t see a Dollar Menu ever again, or if we do, it might come from an automated burger machine. The serious unintended consequences will come 50 60 ,70 years from now… assuming we last that long.