Friday, December 27, 2013

The Main Problem with a $15 an hour minimum wage

Here is the problem as I see it: You can now by a robot that you can physically train to do most repititive tasks within one hour or less for $20,000. What this means to an employer is that for approximately $3 to $4 an hour 24 hours a day for 3 years (until the robot needs to be replaced) you could get the same labor as paying $15 an hour for a person (not including extra money for benefits, health care, time out to have babies or get sick etc.

So, if you were an employer would you choose a robot at $3 to $4 dollars an hour total cost or a person at $15 an hour (not including time off for sick days or having babies or minor operations or sick leave etc.?

Though people who have never owned a business might not think this way, this actually is the way the real world works for people who own businesses unless they are running a non-profit organization which might have completely different parameters. But, when people run for profit organizations usually the above problems are the ones the employers are facing.

So, if the minimum wage is raised to $15 an hour expect there to be many less jobs at this wage than before. This is just about economics and a free marketplace and competition. Though Employers might want to keep all their employees and pay this kind of wage they might also just go out of business trying to do it while competing with other companies that find a way to do things cheaper with robots or overseas.

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