I am on the board of a Homeowners Association (HOA). Recently we received the letter below from our landscaping contractor. I have redacted any identifying information for privacy. You can click on the letter to enlarge it.
This shows the effect of government-mandated minimum wage increases. The result is almost never what is intended. The additional costs are passed on to the consumer, and the whole process simply drives up inflation. We, the homeowners, are going to pay more for the landscaping, so the workers can get their higher minimum wage. This happens when there is nothing the company can do about it.
Other affected companies, like fast food restaurants, have choices, usually related to automation. We have seen more self-service kiosks spring up in fast food places, replacing the high school students behind the counter. Restaurants figure out how to make do with less human labor, not more. In that case, minimum wage incentivizes automation.
Recently I have seen Bernie Sanders attack Amazon and Jeff Bezos, who recently passed Bill Gates as the richest man in the world. Here is one of Bernie Sanders’ tweets:
While Jeff Bezos' wealth has increased $260 million every single day this year, he continues to pay many Amazon employees wages so low that they're forced to depend on taxpayer-funded programs such as food stamps, Medicaid and public housing to survive. https://t.co/2xankLTd9F
— Bernie Sanders (@SenSanders) August 24, 2018
Here is another one, where you can hear Bernie speak about the subject:
There is something fundamentally wrong when thousands of Amazon workers are on food stamps while their boss, Jeff Bezos, is the richest man in the world. pic.twitter.com/MmET8n4nGG
— Bernie Sanders (@SenSanders) August 24, 2018
This is a complicated subject. Bernie wants to force Amazon, and other companies, to pay their workers a “living wage” that takes them out of the income range that qualifies for welfare.
Yes, you and I, with our tax dollars, pay for food stamps and other programs to help Amazon workers who can’t feed their families on the money they earn.
Sanders rages against Bezos, who has built the company into what it is today.
As cruel as it sounds, however, Bernie’s answer isn’t going to work. It’s not the government’s job to tell companies what they need to pay their workers. Companies pay their workers what they need to pay them to do the jobs they need done. It’s as simple as that.
If there are enough high school students who are willing to stand behind a counter at McDonald’s for $7.25 an hour, then that’s what McDonald’s will pay.
If Amazon workers don’t like their wage, why don’t they go to another company that pays more for the skills they have? Why don’t they all leave Amazon? If Amazon could not find workers to work for what they pay, they would raise that pay.
The problem is that the low-paying jobs are those that do not need a lot of skills, education, dedication or creativity. Go check out what Amazon pays its engineers! You’ll probably find $120,000 and above as the average. Why don’t the workers that don’t like the low wage become engineers so they can get paid high wages?
We also keep pointing out that the average CEO makes 312 times as much as the average worker. I just found this in Time Magazine today:
Here is what I say: If you like the pay of the CEO, why don’t you become the CEO of one of the top 350 publicly held companies in America?
The problem is that it’s hard to do that. It takes years of education, working at entry-level jobs, climbing through the ranks, working in stressful careers, doing 80 plus work weeks for years on fixed salaries, getting promoted to management, working 12 hour days 7 days a week in management. If you do all that, and you happen to choose an industry and career field with a future, and your company doesn’t go under as you work you butt off, and if you’re lucky and don’t get sick, and if the economic cycles align to your benefit, you might one day find yourself a CEO. And you make the big bucks.
After you have gone through that, you will know that the government had nothing to do with your overnight success and your phenomenal income.
You will also understand that minimum wage laws don’t work. All they do is force the working people to pay for those that don’t work, or don’t want to work, or can’t work, or don’t have the education needed to work.
This is what feeds Trumpism in the first place. This is why our country is divided. Trumpism does not work. But Bernie Sanders’ socialism also does not work.
Neither is the solution we need for a well-functioning society.
The real solution is education, and that is for another rant.