Wages paid
to employees for their time producing goods and services definitely have an
impact on the cost of buying those goods and services. By the same token,
executive pay and profits for the owners do the same. Cost of raw materials,
energy, rent, and other cost centers all add to the price one must pay.
Non-productive hours are likewise a big burden on the sales price of
everything.
Every
business venture has both internal and external costs associated with their
operations. Internal costs are the payroll, taxes, utilities, accounting,
materials, etc. They are all rolled into the "market price" of
whatever the business does. External costs are for such things as the town
downstream having to remove the waste products in the river water so they can sell
it as potable. The business who dumps the chemicals in the river doesn't have
to pay those costs and they do not include them in their pricing.
Similarly,
businesses who pay workers less than the poverty wage rate for labor are making
it necessary for someone else to pick up the tab for the costs they account as
external. In 2016 the disputed consensus is $15 per hour is the base wage
necessary for a full time worker to be paid so he or she doesn't not need wage
subsidies paid by taxpayers. This $15 per hour results in an annual income of
about $30,000. If an employer pays less than that amount, the employee probably
needs wage subsidy in the form of Food Stamps (officially called SNAP), rent
subsidies and Medicaid coverage to make ends meet. The employer can account the
wages-not-paid as part of its profit margin for owning and operating the
enterprise.
One big
argument against raising the Minimum Wage to $15 per hour is that it will
"kill jobs". Yes, the near doubling of wages for businesses which are
now paying $7.35 an hour will cause the businesses to re-evaluate their
staffing levels and product/service prices. Not every employer who is paying
sub-standard wages is paying as low as the Minimum Wage, therefore their
problems will not be as great.
The claim by
businesses is paying the $15 rate will require they cut staffing. This may be
true if the company is already operating close to break-even and/or they cannot
increase the prices they charge. Their arithmetic says, "If I must pay my
workers twice as much in wages, I'll have to cut half of the positions."
Two
employees earning only $15,000 per year each need another $15,000 in subsidies
to match the $15 minimum wage that is being proposed and legislated. It would
be better for one person to be paid the new minimum and not need subsidies.
What about the other guy who is full unemployed as the result?
The person
who loses his job because the employer can't or won't realign his operations
will need full support of the order of $1250 per month ($15,000 per year) until
he obtains a replacement job. Taxpayers may have to provide his income during
that period but at least when he does become employed again it will be at a
wage to pay all his living expenses. Employers need workers. When they want to
expand operations or production, they will seek more employees and will have to
make their decisions based on a wage which doesn't require subsidy by
taxpayers. In this manner new jobs won't require subsidizing the business
owners with tax dollars. Those businesses will not be able to
"externalize" the true cost of their operations and make everyone
else pay for that privilege.
Large and
influential corporate businesses do this all the time. Or at least try. Mining
operations extract the minerals and leave the land in poor condition which many
times includes toxic mine drainage. Hydraulic fracturing extracts the gas and
oil while creating billions of gallons of toxic water laden with the fracking
chemicals and core cuttings. Those businesses eventually all go bust and use
bankruptcy to discharge their financial obligations.
Small
businesses claim they create millions of jobs, but if those jobs pay
sub-standard wages, the owners are being afforded a taxpayers funded subsidy in
order to be allowed to pay low wages. If the low wages are absolutely essential
to the viability of the enterprise, then at least we ought to acknowledge the
facts and call the wage subsidies what they are: subsidies to the business
owner.
All SNAP
funds go to the food producers. The people who get the allocation are mere
agents for who gets the money and they assure the producers actually do
something for the subsidy. Every rent subsidy dollar goes to a land and
building owner in order to make their investment property businesses
profitable. Without the rent subsidies many dwelling units would be vacant or
at such a low rent the owner cannot afford to maintain the property.
The bottom
line is we as a society want people to have food and shelter even when the
purely economic market factors dictate a lower income for businesses than it
costs them to operate. We need farmers to plant and grow food no matter how
much it costs to do it. We need the food prices to be affordable so everyone
can eat. To accomplish these to conditions we must have farm and rent subsidies
or we must increase the income of people who provide their labor for an hourly
wage so they CAN afford the market prices.
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