Hurt ALL The Small Businesses!

Or at least that’s what some legislators are attempting.

Currently, Georgia’s minimum wage is $5.15 an hour. That’s far below the federal minimum wage of $7.25. Legislation has been introduced in several states increasing the minimum wage and other states have increased minimum wage through referendum. The states that have increased the minimum wage are diverse–some red and some blue.

House Bill 272–relating to Georgia’s minimum wage–was introduced on Monday. The bill would raise the state’s minimum wage to $10.10 an hour; however, that rate would change the following year. The minimum wage would increase every year based on the cost of living as provided by the US Department of Labor’s Consumer Price Index on Urban Wage Earners and Clerical Workers.

According to the bill, in September, the Georgia Department of Labor would measure the cost of living increase as of the preceding July over the July levels of the immediate preceding year. The state minimum wage would increase according to that percent on January 1 of the following year.

Let’s say this bill was enacted in 2012. The minimum wage would increase from $10.10 to $10.50 in 2014 and then to $10.92 in 2015.

In the simplest of terms, this bill is insane.

Minimum wage suggests that every employee is valued at the government instituted rate. Currently, the federal government tells businesses that an inexperienced, high school junior is worth $7.25 an hour. Spoiler: They’re not always worth that rate. Raising the minimum wage hurts small businesses seeking to expand. This bill would truly hurt Georgia’s job growth.

I recognize this bill will get nowhere. Proponents of minimum wage increases scream that 70 percent or more of Americans support raising the minimum wage, but legislation with strong public support can still be poor policy. And this bill is just that: poor policy.

24 comments

  1. blakeage80 says:

    I have a Master’s Degree and about 20 years experience in the workforce. Some hours, I’m not worth $7.25.

  2. Noway says:

    Love your post, Will, and of course you’re correct but you’re gonna get beaten and blindsided by the libs on here who’ll think you’re heartless for not wanting to raise it to $15 an hour for all of those poor McDonald’s workers who “can’t raise a family of four” at the current wage level. I’d lend you my armored vest if I lived nearby! LOL!

  3. John Konop says:

    A factor to consider is employees below the poverty line get subsidies from tax payers. I have no issue raising the minimum wage, if we offset it with tax savings. In theory it would move more money into the economy directly, and less through the government onto people. If taxes are lower also it would create more spending ie fuel economy…Also it gets more people off the government hand out system…..It needs to done in conjunction….

  4. saltycracker says:

    We’re gonna have to figure out a piece work pay system or hire more illegals.
    At least the importers will be thrilled to get some offset to the strong dollar.
    And order more on line, tax free from low wage countries.
    And add so many destitute folks to the Democrats causes.
    Can we solve some more on this by adding tips and other supports into the charges and getting them reported ?

    It’ll all work out, not so much for those sans or developing skills.

  5. Alex Rowell says:

    You’re right that there can be bad policy with wide public support. Minimum wage hikes, however, don’t fall in that category.

    One of the best, balanced reads that covers the economic literature on this probably comes from The Economist. They were like you in 1999 – convinced that any minimum wage in Britain would lead to a catastrophe. However, they explain that “Partly as a result of this experiment on our homestead The Economist has changed its mind.”
    http://www.economist.com/news/finance-and-economics/21567072-evidence-mounting-moderate-minimum-wages-can-do-more-good-harm and http://www.economist.com/blogs/democracyinamerica/2014/05/minimum-wage

    Several studies using contiguous counties across state lines with different minimum wage rates have shown that higher minimum wages either increases employment or is employment-neutral. The 13 states that raised the minimum wage in 2014 exhibited higher job growth than the stagnant states.

    Finally, tying the wage to automatic cost-of-living increases is far from insane. Productivity typically grows faster than the CPI, so employers are overall still paying less per unit of output each year. In fact, if the federal minimum wage had been tied to even just 1/4 of productivity growth since 1968, letting owners pocket 75% of gains to productivity, it would have hit $12.25 in 2012.

  6. Max Power says:

    Minimum wages are bad economic theory, unfortunately for economists they turn out to be good economic policy. There’s a reason it’s called the dismal science. A noticeably higher minimum wage creates wage pressure at the bottom of the market so someone making $10 feels more secure in asking for $12. That’s where the real impact comes from not so much on minimum wage earners but from those just above it.

  7. Raleigh says:

    Try this on for size.

    Any person in the work force that has not graduated high school have their minimum wage set at 5 dollars/hour and no more that 15 or 20 hours a week during the time school is in session.

    Illegal’s would be set a 15 dollars an hour where the business is surcharged 10 dollars an hour to prop up Social security and Medicare. Then tax their income allowing no deductions. That might take care of 2 problems.

    Just an idea…….thoughts?

        • TheEiger says:

          “Any person in the work force that has not graduated high school have their minimum wage set at 5 dollars/hour and no more that 15 or 20 hours a week during the time school is in session.” – I grew up on a farm and trained horse every afternoon after school from the time I was 14 until I graduated high school. I regularly worked more than 20 hours a week during the school year. Why are you going to stop a kid from working hard to save money? I also got paid $8 and hour. More than the minimum wage. You would tell me that I should be happy with $5 an hour and to work less. That’s a great work ethic.

          “Illegal’s would be set a 15 dollars an hour where the business is surcharged 10 dollars an hour to prop up Social security and Medicare. Then tax their income allowing no deductions. That might take care of 2 problems. ” This one is easy. We shouldn’t be hiring illegals at all. Guest workers that are here on a temporary visa? Absolutely. Illegals? No. We should be harder on people that hire illegals and not softer.

  8. Raleigh says:

    Well dialogue is a wonderful thing, I stand corrected as I misspoke about the high school part. What I meant to say was High School “Students” that have not YET graduated high school. Perhaps the cutoff should be 18 years old unless you get a department of labor permit for full time work. Sorry about that.

    As far as illegals I thought that was the point. Since hiring them can’t seamed to be stopped then remove the monetary incentive for both parties. People tend to react faster to a dent in their pocketbook.

  9. All Minimum wage jobs hurt full time employees.

    Maybe we should just do away with all minimum wage jobs, so we can focus on getting the folks who are looking for work the jobs they need, and not reinforcing old time identity politics.

    To me, min. wage and working full time implies you’re also on welfare. At that part, it’s like income support, and you’re way above min wage.

    So let’s just get rid of it all together; maybe at that point, businesses will have to compete with each other for low wage labor, and not have an artificially low negotiation point to justify a rediculously low wage.

    Wages would be higher if you didn’t have a min. wage.

    • Raleigh says:

      “Wages would be higher if you didn’t have a min. wage.” That’s laughable. Where is your data to back that up? For that matter why not eliminate being paid with legal tender i.e. money? Just go back to the company store and receive your pay in script. This is one of the reasons labor unions came into existence and those reasons are still out there today.

      • why is it laughable that people will pay the least they can for a various reasons – and on the other side – folks want as much as they can get for various reasons.

        Why then have them start at an artificial point that has nothing to do with the work being performed? Imagine if folks had a minimum number in mind – they can’t work for less than that.

  10. benevolus says:

    How does raising the minimum wage hurt small businesses? If I and all my competitors have to do it the playing field stays the same, maybe we all have to raise prices a little bit.

    • Baker says:

      Your labor costs go up. You raise prices and maybe people might not be as likely to come into your benevolent little shop. Unless you have an inelastic product, you’re out of luck.

      • John Konop says:

        That is why, we must off set it with tax breaks of equal value of what we saved on entitlements….it should on a macro offset any inflation issues…..if it saves 100 billion in welfare than we reduce taxes by that ratio….

        • John Konop says:

          In fairness….it is a ratio of macro spending verse real wages….That is why we should look at it is a trade off between less welfare ie less taxes…..and more spending….if not the inflation will effect middle class spending…I told many on this blog we would see energy prices drop….and the economy heat up…via 70 percent of the economy being consumer spending….very similar concept….

          • benevolus says:

            I’m just saying that a company isn’t going to lose business to a competitor because everybody will feel the same increase. If it were to cause a large enough price increase then people would maybe not spend as much for discretionary stuff, but an incremental change in minimum wage labor could not be much of a percentage of a companies cost of doing business. I mean, we’re mostly talking about fast food and other unskilled labor.

            Info about the impact of a minimum wage increase:
            http://www.dol.gov/minwage/mythbuster.htm

            • Baker says:

              So at that point we’re mostly talking about inflation?

              If a fast food joint has it’s labor costs increased by that amount, why would they hire a 15 yr old who knows nothing when they might just be fine without him/her? It’s all marginal and the government pretends as if it can just dictate this stuff.

              I generally agree with what John is saying but I have zero faith that welfare spending would go down.

  11. Dave Bearse says:

    Presumably then, you think a substantial increase in the gas tax, and thereafter indexing the gas tax to inflation is qualifies as “insane”.

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