Why raising minimum wage doesn’t work
Let me start off by asking YOU a couple of questions.
- How many times has the minimum wage increased?
- Has your financial situation improved as a result?
- Or, are you further in debt?
- Have you been able to increase your buying power?
- Are you able to pay bills better?
- Can you buy more food?
- Able to afford better housing?
- Have you ended up in a higher tax bracket?
- Do you have more or less take home pay after deductions?
If raising the minimum wage REALLY worked—wouldn’t poverty already be gone?
How many times must the minimum wage be increased to get this message across? Raising minimum wage doesn’t work.
Words of Wisdom from the Youth of Today
Well, in the words of my own nephew in his early 20’s stated on June 2, 2014, one day after one of the minimum wage increases—he sees it as this:
“So minimum wage went up to $11/hour as of yesterday in Ontario, and people are still calling it to be raised to $14/hour. What these people fail to realize is that big corporations aren’t going to just eat the cost of wage increases, they WILL raise prices to offset the cost &/or give less hours to people, &/or lay more people off. It’s just good business, if expenses go up, then prices need to be raised to offset the increased expenses.
On the flip side, forcing small businesses to pay higher wages increases their expenses on a larger scale (as wages are a higher percentage of a small business’ s expenses than a large corporation) and it makes them LESS competitive with the big corporations. Meaning more small businesses will go out of business (as they will be too expensive versus the large corporations who will still have lower prices), and less jobs will be had to go around. As much as I agree that the average Joe needs to make more money, raising minimum (wage) is not going to raise their effective income (income compared to living expenses).”
How is it that a young man just getting started in the work world can see this so clearly and politicians and activists can’t ??
Another Minimum Wage Person’s Perspective
My husband and I, also at that time, congratulated a young person working at a local coffee shop franchise. We commented to her about what would she do with her raise.
She laughed and said, “What raise? I’m going to have less money than before.”
We asked her what she meant by that. She replied, “Well everything will go up in price of course.”
Which of course this is true. We already knew that, but it was refreshing to see, yet again, another person in their 20’s being able to grasp this very real and true fact.
When does the Tax Level Increase?
And at what income level does your tax level increase? When it does, you will pay out more in taxes, once again decreasing your net income. Anyone think of that ?
My husband, Barry, remembers years ago, when factories were still around and the Union was doing contract negotiations. At that time the Union was trying to have wages increased by something like $1/hour. Now the Company tried to talk them out of it and bring it down to $0.50/hour instead. But the Union kept insisting, and the Company kept trying to tell them they (the Union) did not really want to do that.
In the end, the Union got their way and the wages were increased by the $1/hour. Imagine the surprise of the workers when on their pay cheques they actually had LESS TAKE HOME PAY than before the negotiations.
Why? How did that happen?
Well, if the workers and their Union had listened, they would have heard the Company trying to tell them to take the smaller pay increase. By getting the larger increase, they inadvertently placed all the workers into a higher Income Tax Bracket. However, if they had agreed to the smaller pay raise, they would have stayed in the lower Income Tax Bracket and even after payroll deductions would have had a higher take home pay than they actually negotiated at the $1/hour increase.
But that is greed for you. The longing for the greener grass on the other side.
What happened when Minimum Wage increased in 2015?
Minimum wage increased in 2015, and what happened as a result? Increased food prices, increased prices in everything.
- So, did your financial picture improve?
- Have you been able to pay down debt?
- Are you able to afford better housing?
- How have you been dealing with your utility bills?
Now the word from the Ontario Provincial Government is that the minimum wage will be increased yet again to $11.40 on October 1, 2016.
Are you prepared to see food prices rise once more? Are you prepared at some time that you will unexpectedly cross the Income Tax Bracket level into a higher zone? Will you actually have more disposable cash after this wage increase?
Will Poverty be eradicated this time?
And if raising Minimum Wage REALLY works to eradicate Poverty—will it FINALLY work this time?
Ever notice how the minimum wage goes up $0.25 but the prices of everything—not just one thing—goes up by $1.00? The gap is getting wider between wages and the cost of things. As well, the poor get poorer and the rich get richer, and the middle class suddenly find themselves among the poor.
When will people see that the minimum wage increases just causes the gap to widen, not lessen. More middle class are finding themselves falling into the gap—no longer on the wealthier side of the great divide. Rather, they find themselves falling quickly towards the poverty side of the Great Divide. Nobody actually got lifted up to the middle class—there is just less people who meet that classification now.
When will people realize that life is so, so much more than the minimum wage levels?
So, what will work?
Well, for starters, how about learning and teaching CONTENTMENT? We are such a materialistic society—a society demanding to have “stuff” and lots of it.
Why? – Do these things really add to our contentment, satisfaction, fulfillment, or completion to our beings, lives, families? The short answer is NO !
Words of Wisdom
“I know how to be abased and live humbly in straitened circumstances, and I know also how to enjoy plenty and live in abundance. I have learned in any and all circumstances the secret of facing every situation, whether well-fed or going hungry, having a sufficiency and enough to spare or going without and being in want.” –Philippians 4:12
Instead of playing the “what if” game in life, why not grasp hold of the reality of the situation and work with that. Don’t miss TODAY.
Remember, we don’t live in a pretend land of “if only”. We need to focus and embrace what it is. We live in the land of the “here and now”.
Some of you reading this will be outraged with my apparent flippant attitude about this and accuse me of “not knowing” – “not having experienced it” – “lost touch with reality of the plight of the poor”.
Measuring Standards to determine Poverty–are they accurate?
Well I beg to differ with you—because the measuring standards of both Government and Anti-Poverty Activists in Canada they would consider my husband and I to be in abject poverty conditions. These are the following things that they would use to reduce our lives to mere numbers and material possessions in their considerations and determination:
- 2015 total taxable income $17,800 (our gross income was only another $45 more)
- we do not own a cellphone
- no home internet
- neither do we subscribe to cable or satellite
- $200 monthly food budget
- 45% of monthly income is used to pay housing costs
My Personal “Poverty” Experiences
In addition, I would like to point out that I personally have experienced bankruptcy in 1995, been homeless and living on the streets in the early 1980’s. I do know—I’ve been there—but where I am today is a spot of contentment and thankfulness.
As independent business owners—you can see that even working full time hours—we make and live on less than minimum wage—just like many, many other small business owners. If we, the business owners, can live on less, then why do our employees need and want to live on more money than the business makes? We’ve been unable to hire employees since 2010 because of the minimum wage increases. Were do they think the money comes from? Trees? You can’t be forced to pay something out of nothing—so what are the choices? Lay people off? Reduce their working hours? Or just stop hiring people and work with less—all in an effort to keep prices down. So you, the business owner, aren’t finally forced to close the business and also join the ranks of the unemployed.
Raising Minimum Wage doesn’t work !! If it truly worked to eradicate Poverty—then we still wouldn’t be having to deal with it.
Even Jesus said, “You always have the poor with you.” John 12:8
Raising Minimum Wage just puts a bigger gap between the poor and the wealthy and the prices of everything continues to climb—ever increasing the stress on families everywhere.
It is time to rethink this—instead of doing the same thing that doesn’t work—we need to rethink this and come up with different solutions.