Kirk Whatley: Proposed minimum wage increase in Massachusetts is ‘lame-brain idea’
To the editor:
If raising the minimum wage truly creates wealth, then let’s just raise it to $300 an hour. That will make everyone rich, right?
This lame-brain idea is further proof that most members of our state Legislature have never met a payroll, have never run a business and have no concept of how an economy works.
The fact of the matter that liberals don’t get is that small- and medium-size business owners are not rolling in cash and are often the last ones to get a paycheck. Small business employers are the backbone of this nation. Small business owners will tell you that if their pay were computed on a “per hour” basis, most would make $1 an hour or less for all of the time they put in.
An $11 an hour minimum wage, as the state Senate now calls for, will not simply be eaten by the employer. That hike will not come out of a company’s profits. An $11 an hour rate will be passed on to consumers in the form of higher prices resulting in inflation.
To stay in business, at a minimum, expenses must be covered. The U.S. Bureau of Labor Statistics said this year that benefits add 30 percent to the cost of employing the average worker. That means that, at a rock bottom, the employer must make at least $14.30 an hour on the employee ($11 an hour pay plus 30 percent extra for benefits). Now, given that minimum-wage, or low-skilled, employees don’t bring much to the table for the employer as far as helping to make the $14.30 an hour, employers may find it economically necessary not to hire another person or not to expand their business — which helps no one.
How do we, as a society, increase everyone’s pay? With a strong economy. During the Reagan administration of the 1980s, unemployment dropped from 10.8 percent in 1981 to 5.5 percent in 1988 and total compensation to workers, including their benefits, rose from $15.00 an hour in 1981 to $16.50 in 1989.
Centralized planning and legislating a huge jump in the minimum wage in a weak economy will only result in people not being hired and business expansions not taking place — the exact opposite of what we need.