The Minimum Wage Debate

Phil Miller and the link he connects with imply that Minimum Wage increases are the sole cause restaurants raise their Menu prices. It is a sentiment which Business owners would like to foster among the general Public. Wrong! These restaurants probably endured a 7% increase in Food prices since the last Menu Price rise, a 12% increase in Utility Cost, also about an equal raise in State and Local Property taxes, and with an estimated 8% increase in Taxes from the new California health plan. The Minimum Wage bill paid by these restaurants (both before and after the Raise) undoubtedly remain the lowest sum in Cost, behind Taxes, Capital, Utilities, Food, and even total Managerial salaries. The Senate thinks to hang up a national Minimum Wage increase because Restaurant owners cannot get a Tax Credit to make up for the lost expense of paying their labor a Living Wage. We cannot risk those vital Profit Margins.

Robert P. Murphy blasts Robert Reich’s commentary on NPR. It is a remarked lucid account, and tackles Reich on specific Point after Point. The trouble stands as his arguments do not invalidate the Reich Points at all:

1) Reich states small Business will not suffer drastically, as these businesses do not compete at a national or international level, and all business must pay the same Wage increase. Murphy states these businesses must compete across sectors, and will lose their part of the total Consumer share. Consumers allocate their expenditures according to their own Consumption schedules, and are unlikely to move from an increased Cost business sector under any adjustment period, if the Consumption is necessary to their daily Work schedule or Standard of Living. Advantage: Reich.

2) Reich states the Minimum Wage has been degraded by years of Inflation, and it will only be a return to previous levels. Murphy states the Minimum Wage degradation aided small business in maintaining low Prices. This is the old argument that discrimination against one segment of Those involved in the economy is Good For Business. It ignores the American desire for a level Playing Field. Advantage: Reich.

3) Reich states that the Minimum Wage would actually help small Business, in the provision of a large Labor pool willing to work at the higher Wages offered. Murphy claims that this purported benefit will decline if all small business are forced to pay this increase. Does it really? The Minimum Wage increase will excite additional laborers to enter the labor force, but in a manner what small business hates; they must accept lower Profit margins and be forced to provide greater Product and Services to maintain their Profit levels (ahh, they have to work harder for the same Pay). Advantage: It’s a Toss-up! lgl