CNN was reporting this today. I had written about this before because of having owned businesses I know that a business is based upon how much something costs to do and whether that is competitive with other businesses. So, when you raise the minimum wage for people that isn't always cost effective to keep that business from going bankrupt. So, this is what I was saying about raising the minimum wage to $10.10 an hour.
It's not that these people don't deserve a raise that's not the problem. The problem is businesses being able to afford to raise those wages without going out of business literally. So, it is realistic to say that raising the minimum wage will likely cost 500,000 people their jobs in the U.S.
This figure is from CNN News on TV today February 18th 2014.
Another thing that has to be considered by Employers is that the actual cost of Hiring anyone over the table for $10.10 an hour is more likely to be actually $20 to $30 dollars per hour depending upon what state and Federal regulations occur where this person is working. The extra $10 to $20 per hour has to do with deductions and training and hiring bookkeepers and accountants to keep track of IRAs and checks and deductions of various kinds and breaks and lunch and possibly day care centers for the minor children of their employees or other things required by the state or Federal Government required by that state or Federal or local governments.
So, any employer must make sure that each person is actually worth $20 to $30 dollars an hour to that business. If an employer is unrealistic and doesn't do this then that business will falter and die (go bankrupt) eventually. So, in order to stay in business and compete with all other businesses this is how an employer has to think in order to stay in business and not go belly up and bankrupt as a business.
However, if $10.10 an hour is required by all over the table employers nationwide this spreads out the liability between all competitors in the U.S. However, this also would give foreign advantage to companies competing from outside the U.S. unless the U.S. raised tariffs against those competitors in other countries. If this wasn't done American companies trying to compete in the world market would fail because of the increase in the minimum wage universally for all over the table workers here in the U.S.
Over the table refers to those legally working and legally being paid by an hourly wage here in the U.S.
For example, some people work under contract which means they are paid in a larger lump sums and then must hire their own bookkeepers and accountants to help manage their taxes for them.
And other people are on Salary which is a weekly amount not based upon hours which sometimes means those people work 80 to 100 hours a week for no extra hourly wages.
Another factor his with international companies who hire people all over the world. If the U.S. because of the minimum wage hike becomes uncompetitive then these companies will just ship more jobs overseas where they might be able to hire someone for $3 to $5 an hour or less to do the same thing that someone here would be paid $10.10 an hour.
One alternative being talked about is only raising the minimum wage to around $9 an hour which would only cost around 100,000 jobs. However, the debating about this likely will go on for some time now. I don't know the correct answer because the best argument for raising the minimum wage is that real income has dropped over 7% since 2000 and this is seriously hurting our recovery from the Great Recession. So, people having more money to spend (since we live in a consumer based economy) will naturally lift the economic viability of almost everyone over time.
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