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Why a Federal Minimum Wage Increase is Bad for America

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Mitt Romney recently came out in support of a federal minimum wage hike. I find this stance short sighted. Forcing a low cost of living state like Arkansas to pay the same wage as a high cost of living state like California is a horrible decision. All you'll end up doing is increasing the cost of everything and the cost of living in Arkansas to make up for it because it costs more to produce everything. This has the impact of decreasing the net worth of everyone in the state of Arkansas as the cost of living goes up to live there. Those who retired there are going to see their standard of living decrease as costs go up. Some on a fixed income who retired in Arkansas because of the lower cost of living may end up not having enough to live off of.

Any minimum wage setting should be at the state level, for they are closer to the working people in their states. Some Washington guy 1,500 miles away from another state could care less about workers in someone else's state. This is a case of high tax states like California forcing those in other states to devalue their resident's net worth and bring expenses up to California levels.

It helps nobody in the end, except for low wage workers for about 1 year, until costs catch up with them. And it punishes those who have worked to increase their wages above minimum wage. Someone working at a place for 2 years to move their wage from $7.25 to $9 could find themselves making the same amount as some inexperienced new hire who comes in at a new minimum wage of $9. This will cause friction in the workplace and does nothing in the end but punish the currently working.

Of course this is on top of the costs to businesses who may not hire as many people, may lay off some, scale back their business, automate certain tasks, outsource certain operations or even decide to close down. Remember, this talk of a federal minimum wage increase is already on top of health care increased costs to businesses because of ObamaCare, uncertainty in the tax law due to meddling of Washington bureaucrats and a host of other federal regulations that are strangling businesses.

It's just not a good idea when you look at the whole picture and don't just buy into the pictures you see of someone holding a sign demanding more pay.

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Posted by Digger on May 9, 2014 06:15 PM (Permalink)

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Taking your point one step further, the cost of living can differ even within a state. Certainly in my home state of Massachusetts, the western and esp. the southeastern parts of the state are far less expensive to live in than the Boston area, where the great bulk of the state's population lives.

Posted by: Phil on June 17, 2014 07:24 PM

Lets not forget the unseen harm in ALL minimum wage laws regardless of its enforced at the federal or local level. The kid just starting out working without any resume and the handicapped person with no skills both will find it harder to find work. In fact if the return they provide to an employer is less (or close) to what the minimum wage is there will be no incentive for any employer to hire them. Minimum wages laws do more harm than good - especially to the poor. For some people, the only comparative advantage they have is their willingness to work for a lower wage than their competition. Minimum wage laws take this advantage away.

Posted by: Jay Edgar on August 21, 2014 01:51 PM

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