The Musings of the Big Red Car

The Curious Reality of the Minimum Wage

Big Red Car here on a glorious ATX day. On Earth as it is in Texas, y’all. Today, we turn our focus on the minimum wage.

The current Federal minimum wage is $7.25/hour.

Individual states may have legislation setting another standard within their states. As an example, California has a $10.00/hour minimum wage which will increase to $15.00/hour by 1 January 2022 (1 Jan 2023 for businesses with 25 or fewer employees). Thereafter, it increases annually with inflation and the Governor of California may suspend increases if economic conditions suggest such a course of action is prudent.

Note that for all of California’s goofiness, it takes six years to get to $15.00/hour.

You may be tempted to suggest that the new California law feels like a head fake. Maybe so?

Who gets paid minimum wage, Big Red Car?

The minimum wage issue applies only to 2.8% of all workers in the United States.

Of that 2.8% of all workers, 50% are aged 16-24.

The young people are almost exclusively working a first job and all are at the beginning of their work careers.

No craftsmen or construction laborers or skilled workers are making such a low wage.

Some qualitative observations

In addition to the numbers, there are some qualitative aspects of minimum wage implications that must be considered.

Employers expect a better skill set from more highly compensated workers. It dampens hiring when wages go up.

Employers will attempt to reduce labor when the cost of labor is increased. Jobs will be eliminated.

The minimum wage might be more fairly described as a “first job” wage based on age, industry, and skill level. It is a beginning point, not an end point.

There is ample evidence that the increase of the minimum wage results in a decrease in total jobs and the destruction of marginally profitable businesses.

Even its most ardent supporters concede that the level of the minimum wage does nothing to address a stagnant economy which is struggling to create jobs, the decline in average family incomes (these are not minimum wage workers), the inequality of wealth creation, or the other economic issues which are at the core of the challenges facing the country.

The minimum wage is a sideshow issue — well, unless, you are one of those who actually loses their job in the process. To you, it’s a big deal.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.