MINIMUM RAGE

The current minimum wage debate is another example of supply-side economics versus demand-side economics, and yet again, not many in the media seem to have a firm grasp of common sense.

John Boehner, Republican, Speaker of the House, when explaining his opposition to raising the minimum wage, stated, "When you raise the price of employment, guess what happens? You get less of it," and yet nobody with a microphone immediately shouted the logical follow up: "Wait, what?"

By extending John Boehner's reasoning: Slavery would be great for our economy.

Republicans are shoveling the idea that raising the minimum wage will hurt our economy because raising the cost of employment will cause a decrease in employment.

This argument is predicated upon the belief that employers hire employees because they have the money (supply) to do so.

This is the same type of claim as "tax cuts create jobs", and both claims are ridiculously false.

We do not have a supply-side economy, we have a demand-side economy: Employers do not hire employees because they HAVE money, employers hire employees because they WANT money.

Tax cuts don't create jobs, WORK creates jobs; and raising the minimum wage will not decrease employment because employment is not contingent upon wage (supply), employment is determined by work (demand).

A restaurant owner does not hire a server because he is getting a tax cut or because he HAS money, a restaurant owner hires a server because he WANTS money.

If a restaurant owner does not have enough servers to satisfy his customers (demand), then demand for his product (restaurant) is going to decrease; and if demand for his product decreases, then the restaurant owner is not going to make much money.

And just because a restaurant owner has a lot of money (supply), that doesn't mean that he is going to hire a lot of servers. Because if a restaurant owner hires too many servers, then there isn't going to be enough work (demand) for the servers, and if there isn't enough work for the servers, then the servers aren't going to make much money in tips.

And if a server can't make much money at a restaurant, then the good servers are not going to want to work at that restaurant. And if a restaurant cannot hire good servers then the restaurant is not going to have good service, and if the restaurant doesn't have good service, then it's not going to be able to satisfy its customers.

And if a restaurant owner cannot satisfy his customers (demand), then demand for his product (restaurant) is going to decrease; and if demand for his product decreases, then yadda yadda yadda...


Furthermore, a minimum wage increase will positively affect our economy because minimum wage earners are mostly poor people, and poor people are basically walking stimulus packages.

Since a poor person has more needs (demand) than he has money (supply) every cent that a poor person gets is almost immediately spent on goods & services, and therefore, quickly recycled back into the economy.

Poor people are not investing their income in 401(k) or stashing their earnings in offshore tax shelters. When a poor person gets a dollar, a poor person spends a dollar; and that dollar is going to other employers, such as restaurant owners, and to other employees, such as servers.

It's not rocket science!

In other news: 2 + 2 = 4