Does Raising Minimum Wage Help The Middle Class?

Last night the President called for raising the minimum wage to $10.10. This is a no brain er for a government expansionist. A win, win if you will. You put your opponents on defensive, trying to defend the “rich”. And if they cave, you get a huge union payoff, and expanding government programs, as the middle class are caught up in the rise of the cost of living without an equal rise in wages. This drives them into government programs in an effort maintain their lifestyle or simply survive.

If the average minimum wage is around $7.50 an hour,. Then raising it to $10.10 represents a 35% increase in wages. Now I will not go into the standard argument about net losses of jobs, or whether you can raise a family on $7.50 / hour. I will assume that the employer will pay this for current and future employees, so this price will be included into the cost of the goods produced eventually. The employer may eat this loss for a short amount of time. However, eventually the price of the goods will have to rise to maintain profit margins. That in turn will cause the cost of living to increase. Within a year, if you could not make it at $7.50, you will not be able to make it at $10.10. Therefore, the cycle will have to continue, with another rise in minimum wage.

Meanwhile, let us look at the middle class family making about combined $24.00 an hour (about $50,000 annually) for the family. Will this families income rise to $32.45 an hour to keep pace with the minimum wage. Unless, you are part of a union with a good contract, or are a prized employee, I would say no.  So this cost is carried, not by the government or employer, but the middle class worker. This would mean that you are losing earning power to younger and less experienced employees. And the older you are the harder this poverty creep will hurt you.

On the positive side, as the government raises the poverty rate to keep up with inflation. You will probably find that you are now eligible for government programs. When they talk about wealth redistribution. Did you really think they were talking about the rich? Well they were. If you didn't need the government to live, you were rich. Welcome to the Socialist Utopia.