Why do Liberals think without using common sense reason.

They are given an issued which from their perspective sounds good. No specifics just a issue in a broad frame. Minimum wage being raised is a good starting point and makes complete sense. 

Hell everybody wants to earn more. $15.00 per hour minimum for all workers regardless what labor they do or how good they are at it. HOORAH! Another progressive act is passed and everybody is making more money.

Well let's take a closer look. Much closer and analyze the increase from start to finish. That great idea might just not be so great after all. There are many various factors to consider besides the initial increase such as related expenses which increase along with the wage increase.

Current minimum wage is $7.25 Increasing the minimum wage may seem like a tool to raise low-income workers out of poverty, but it inevitably hurts the very people policymakers intend to help.

So let's start with the additional cost employers pay on top of the 7.25. These costs include 28% for matching the social security contribution, state disability, unemployment and a host of others. So the actual hourly rate is $10.00 per hour. That 28% is, costs in addition to payroll.

Now we will look at what else it has an afect on. Keep in mind The Hamburger or cheeseburger has several companies involved in getting it to you. The company that produces the feed for the beef, the farmer who grows the grain and hay to sell to the cattle farmers who and feed companies. Then the butchers who slaughter the cattle and produce the burgers plus the companies that produce the cheese, the Ketchup, mustard, grow the lettuce, tomatoes, and secret sauce. We are getting you the cheese burger but still need a few more ompanies involved like the company that makes the wrappers, the bread for the bakers to turn into buns and tuckers and trains and airplanes and qho ever else transport the products. A lot of employees have to be involved in your being able to buy a $3.00 cheeseburger.

Guess what is going to happen to the cost of that burger when the minimum wage is increased to $15.00 per hour. Which is more then double the current amount. Mulitiply the increase by the number of people involved in the finished product. For easier understanding we will use 100 people who all get the increase of $7.75 per hour and an increase of $9.92 per employee per hour for employers. So the employees see a increase of $775.00 and of course higher taxes. Sam is going to get theirs first. We will use 33% for the tax rate. So the $15.00 per hour is already reduced to $10.95 and now we have to reduce it even more for Social Security, state taxes, medicare, and other cost. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. The employee income after Social Security deduction is 10.02 and $9.80 after Medicare.

But what happens to the cost of the burger from statrt to you geting it because you will be the one paying for the minimum wage increase.

Every company has to increase the cost of their product to cover the increase in wages. The seeds the farmer to plant will now cost more. Say a 2% increase for each step of the process. If the sed now cost the farmer $2000.00 the new cost will be $2040.00 that additional cost is passed on to the cattleman along with the farmer's increased wage cost of $7.75 so the cattleman now sees an increase of 7.75 for each of the farmers workers plus 7.75 for each of jis workers plus an increase in the feed of 2%. So the feed that cost $2,000.00 has now gone up to $3,000.00 to cover the cost of seed and additional labor cost. Got the idea yet? Each company has to increase their product cost or close their business down.

So after the additional wage increase and the increae cost of everthing else the cheeseburger that now cost $3.00 will cost $8.00 or more just to cover the cost of doing business. It will be the same for every consumer poduct so the employee will end up having less then they do now. The cost of living is far above the income levels now and historicly each increae in the minimum wage has see the cost of living increase beyond the amount of the wage. The employee ends up with less spendable income then before the raise in wages.

Raising the Minimum Wage: The Effects on Employment, Businesses and Consumers

When the government imposes a higher minimum wage, employers face higher labor costs and are forced to respond by decreasing other production expenses. As these employers cope with the increased costs of a mandated wage raise, they often respond by cutting the jobs available to less-experienced and less-educated employees. The result is that these individuals, who already have few employment options, find it more difficult to get a job.

Increasing the minimum wage benefits those who already have a job at the expense of the unemployed. However, even those workers who see an increase to their wages may not feel the full benefit of higher pay, as businesses raise prices to compensate for the increase in labor costs. In particular, food prices tend to increase when the minimum wage is increased, exacerbating the problem for those who cannot find work and offsetting gains for those who can.

Most minimum wage employees work in industries with very low profit margins. The restaurant industry, which employs close to hald of the nation’s minimum wage workers,   has an average profit margin of only 2.4 percent. This means that on a $100 restaurant bill, the company only gets to keep $2.40–the rest goes to pay for food costs, rent, labor, etc. This also means that when these employers’ costs increase – like when the minimum wage is hiked – they must raise prices or cut other costs to stay profitable. Raising prices often isn’t an option because customers might stay home if their favored goods and services became more expensive. So, that leaves cutting costs. In practice, this means layoffs, reduced hours, and hiring freezes.

The overwhelming majority of economic research confirms that minimum wage hikes cost jobs. The nonpartisan Congressional Budget Office expects 500,000 of them to be lost if the minimum wage is increased to $10.10 an hour.

Many commentators still say, however, that lost jobs are a small price to pay for lifting other workers out of poverty through higher wages. However, there is little evidence showing that increasing the minimum wage reduces poverty. Economists at Cornell and American University studied states that raised their minimum wages and found no evidence that the wage hikes reduced poverty.

The truth in the minimum wage debate is that most minimum wage workers don’t need the government to give them a raise; they can get one on their own. Research shows that the vast majority of minimum wage workers earn a raise in their first year on the job. Minimum wage jobs are a stepping-stone, an entry point into the job market to gain skills and quickly make yourself more marketable at higher wage rates. Raising the minimum wage weakens this bottom rung of the career ladder by forcing employers to reduce job opportunities– hurting the very people the wage hike is supposed to help.

A Better Way?

Relative value of non minimum-wage employees

But minimum-wage earners are clearly not the only pay level that will change. Besides the additional cost of salaries for minimum-wage employees, there are likely to be increases for other workers as well. Employees who now make more than minimum-wage people at their company will need to have raises as well. The relative value of an employee – whether perceived by the individual employee, or by his peers or family, can be measured in his or her pay rate as compared to the minimum wage.

What will happen is that people who now make $20 per hour compared to the $10 minimum wage will feel the necessity to make $30 per hour, so they are still worth double the minimum wage.

And since neither the job duties of the minimum-wage earner nor of the higher-wage earner are likely to change, the pay rate must. And don’t forget about the 28% increased burden. This single factor Relative Value Pay Rate will become a huge cost for employers, as all other employees are going to demand pay increases commensurate with their relative values. Whether this results in greater purchasing power or a higher standard of living for minimum wage workers is an open question. And it’s one the government either hasn’t considered or is not discussing.

The bottom line is regardless weather the minimum wage is increased or we choose another wage increase method the cost for everything must increase proportionally which means the workers supposed increase in wage will be dissolved by increased cost of products.