Of all the sounded-clever-but-was-actually-idiotic things Obama said in the State of the Union address, this was the most cleverly-sounding-but-really-stupid:
And to everyone in this Congress who still refuses to raise the minimum wage, I say this: If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it. If not, vote to give millions of the hardest-working people in America a raise.
As I said, sounds clever. A bunch of liberals in my Twitter feed said the equivalent of, “Oh, snap!” But the reality is that you’re not supposed to be raising a family on minimum wage. Minimum wage is an entry level wage, a wage to get your foot in the door for future better-paying jobs. I made minimum wage once. Actually, I made less than minimum wage because I was paid in cash under the table. But I was a teenager, so it was fine.
The biggest reason to oppose the minimum wage, of course, is the Law of Supply and Demand. If you artificially set the price of something high (low-skill labor), you will find that people learn to live without it (i.e., they stop hiring people). We’ve been told this is a myth, despite clear evidence that it’s not. Well, here’s another example of this thing that supposedly never happens:
In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018. Although all of us at Borderlands support the concept of a living wage in principal and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31st. The cafe will continue to operate until at least the end of this year.
Many businesses can make adjustments to allow for increased wages. The cafe side of Borderlands, for example, should have no difficulty at all. Viability is simply a matter of increasing prices. And, since all the other cafes in the city will be under the same pressure, all the prices will float upwards. But books are a special case because the price is set by the publisher and printed on the book. Furthermore, for years part of the challenge for brick-and-mortar bookstores is that companies like Amazon.com have made it difficult to get people to pay retail prices. So it is inconceivable to adjust our prices upwards to cover increased wages.
The change in minimum wage will mean our payroll will increase roughly 39%. That increase will in turn bring up our total operating expenses by 18%. To make up for that expense, we would need to increase our sales by a minimum of 20%. We do not believe that is a realistic possibility for a bookstore in San Francisco at this time.
I will point out something else that they gloss over. It’s true that businesses like the cafe side of Borderlands can cover the minimum wage hike by increasing prices. But you know who pays those increasing prices? Primarily poor and middle class people who go to the kind of places — fast food restaurants, cheap bookstores, etc. — that pay their employees minimum wage. So you’re giving them money with one hand while taking it with the other.
This is a liberal bookstore ownership. That’s clear from the way they talk about this. But they point out that the minimum wage hike will increase their operating costs by 18%. Other business will see similar hikes. Do you know how many business are operating at an 18% profit margin? Very very few. And certainly none that are patronized by the poor and middle class.
Minimum wage hikes sound good and make liberals feel good. But they are a nightmare for the job market. If you don’t believe me, believe the guys at Borderlands. They have no reason to spew “right wing propaganda”.