Friday, December 11, 2015

Minimum Wage - How it really works

I read another article on raising the minimum wage today. Something that I haven't seen that I find really interesting is who pays for what. So to grossly simplify things, let's imagine there are 3 people here: The buyer, who buys the product, the worker, who runs the store, and the owner, who gets the profit. Now I know it's more complicated than that, but just bear with this example for a moment. Now, There's supposed to be a delicate balance here. The buyer buys the product, which gives the store money, allowing the Owner to both buy more product, and pay the worker. The Worker keeps the store running, so the owner can sell his goods and the Buyer has a place to buy the things he needs. In this scenario, everyone profits. The Worker gets a wage, the Buyer gets the product, and the Owner makes a profit.

But let's say it costs $20 for the Worker to live. The Owner only pays him $10. So where does the other $10 come from? Currently, it comes from taxes. The Worker has to use government assistance to cover that negative, either through food stamp programs, medicare, or welfare. Sure, people want to raise the minimum wage to $20, so that the Worker can live on salary alone, but here's the interesting bit. Right now, where does the government get the money to pay that $10 to the Worker? The Worker doesn't pay into it - they can't afford to. The Owner also doesn't pay into it, because of tax loopholes, and corporate subsidies. So nearly all of that additional $10 comes from the Buyer. 

The point is, if minimum wage is raised, that means the Owner pays the difference, but right now, the Owner has tricked the system so that the Buyer pays it, as well as paying the Owner. It might be better for both the Buyer and the Worker if the Owner paid the Buyer a livable salary, but guess who decides that change should be made? That's right - The Owner. Doing that would actually be out of line with his own best interests. So the Owner convinces the Buyer that he pays the Worker enough, and that the Worker is just lazy, or greedy. That the Worker doesn't DESERVE more pay. And the Buyer buys it, since that's what Buyers do. The Owner says "I'd like to pay them more, but if I did, I'd have to raise the cost of everything you buy!" but doesn't mention that if he paid the Worker more, the Worker would in turn need less from the Government, meaning the Government would need less from the Buyer, meaning the Buyer would have more money.

 To really fix this situation, the Buyer is the one that has to see the problem, and right now, they're just blind to it, either because they don't want to see it, or because the Owner has tricked them into thinking it's a non-issue. But next time you're the Buyer, think about how the Owner is treating the Worker, and decide if you really want to be complacent in that system.