Minimum Wage Increase Caused Teens To Be Fired
Who would have ever seen this coming?
Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they’re cutting hours, instituting hiring freezes and laying off employees.
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“I’ve had to go to some of my kids and say, ‘Look, my payroll just increased 13 percent,’ ” he said. ” ‘Sorry, I don’t have any hours for you.’ “
If only someone could have predicted this. If only someone could have seen it coming! But who coulda possibly known that this would be the result?
Oh wait. I did…:
Suppose you own a bakery. You have an employee who gets you $6.00 every hour in income. You have to pay this employee $6.15 every hour. This means that you are losing $0.15 every hour.
You have two options: you either increase the prices of everything or you fire your employee. Here’s the problem with increasing the prices of everything: most people don’t earn minimum wage, and therefore their income is going to remain the same. As such, they won’t have as much disposable income (unless or until a cost of living adjustment happens during their raises) but everything will cost more. This means that, at least right off the bat, people will buy less; and if they are buying less then the employee that used to get $6.00 an hour for his employer is now making less.
This leaves the unpleasant option for many small businesses that they will have to axe their employees. Thus, unemployement will go up.
Clearly, something must be done. I know! Let’s increase the minimum wage again!
