By FRED KRONER
fred@mahometnews.com
There are good ideas.
There are bad ideas.
There are also ideas that masquerade as good, but upon closer scrutiny aren’t as beneficial as they may initially seem.
I place the idea of raising the minimum wage to $15 an hour by 2025 in the latter category.
This may seem insensitive to those who are struggling to make it by working jobs that currently pay the minimum $8.25 an hour, but there’s more at stake than the pure numbers.
On paper, they appear to be helped with the salary increase, but in reality, it is a different story.
Look at the issue, first from the perspective of those in the workforce earning the minimum wage.
Based on a 40-hour work week, that would translate into a yearly income of around $17,000.
If their salary were to be increased to $15 an hour, that same person would be earning around 31,250 annually.
That’s a raise of more than 80 percent.
All is good, right?
Maybe not.
What is the cost for this worker to make these financial gains?
I can’t speak for all small-business owners, but I can for one in particular.
When I’m not working as a freelance writer, I’m the co-owner of Lucky Moon Pies and More, which opened in Mahomet in July, 2017.
Suppose our business wages increased by more than 80 percent.
The repercussions should be obvious.
To keep operating, there are two choices.
We could reduce costs — which means either having fewer employees or giving them fewer hours — or raise prices.
If the cost to purchase an item is increased by an amount comparable to the increase in wages paid, consumers are no better off than they were previously.
The customers who were already earning in excess of $15 an hour at their jobs are now subjected to a price increase at the shop that is almost double for the same product.
Use your imagination about how long these persons will remain loyal customers.
And now, we’re in a game of dominoes. If there are fewer customers, then the business needs to make fewer items.
If it is making fewer items, less staff is needed.
It’s a cycle, if continued, that could ultimately result in the closure of a business. Or many small businesses.
That’s looking at the situation from the view of one group of people, those customers who already were making a wage of $15, or more, per hour and, in theory, would not be greatly affected by a higher minimum wage.
An equally large group is those who are having their salaries lifted over a period of months until it hits the new minimum wage.
If they are paying $4 for a slice of pie while earning $8.25 an hour, how have they improved their life if they are now paying $7.25 per slice while earning $15 an hour?
Or, that can be viewed from the opposite side of the coin.
If a person couldn’t afford a slice of $4 pie when their wages were at $8.25 an hour, then they still won’t be able to afford one that’s priced at $7.25 if their salary has jumped to $15 an hour.
Business owners can only take so many hits before they are forced to pass costs along to the consumers.
It’s easy to say that higher wages is the solution. Candidates surely get votes if they make that as a campaign promise.
It’s just as accurate to say that higher wages are the culprit that will not assist all of those in need of digging out of their holes.
A sweeping across-the-board change will hurt as many people as it will help.
