We Don’t Have a Wage Problem; We Have a Money Problem
On June 7, the Washington DC Council voted to raise the city’s minimum wage to $15 per hour. DC joins New York and California, along with a number of major US cities that have made the move to boost the minimum wage over the last year.
The DC Council’s vote was a major symbolic victory for supporters of the well-organized “Fight for $15” campaign. According to the Washington Post, the effort resonates with Americans:
Polls find strong support for a $15 wage floor as many Americans have become frustrated by the loss of well-paying manufacturing jobs and the growth of low-paying retail and service jobs.”
Last spring, ReasonTV asked residents of the “trendy, hipster enclave” of Silver Lake in Los Angeles, “What is the ‘right’ minimum wage?” Unsurprisingly, most assumed a higher minimum wage is a no-brainer – a win-win for society and workers.
Presidential candidate Bernie Sanders has made a federal $15 minimum wage part of his campaign platform. Hillary Clinton has indicated she would support a gradually phased in federal $15 minimum.
As the Post reports the movement is clearly gaining significant steam:
The District’s move is the latest in a series of unexpected and rapid-fire victories for the $15-minimum-wage movement. What began as an audacious push by fast-food workers just a few years ago is evolving into a new labor standard, with state lawmakers in California and New York agreeing to implement a $15 minimum wage by 2022, and legislatures in Connecticut, Massachusetts, and New Jersey weighing similar measures.”
The current economic climate makes the push for $15 understandable. DC Mayor Muriel E. Bowser described the situation faced by DC residents, and it reflects realities across the US:
When I see how much it costs to live in Washington, D.C. — and that cost is only going up — we know that it takes more money for every household to be able to afford to live. There are families working day in and day out, sometimes two or three jobs but barely making ends meet.”
But is a $15 minimum wage really the solution to what is a very real problem?
Some ominous signs indicate it may actually make things worse. A recent New York Post article highlighted how New York City car washes tend to be less automated than in other parts of the country because the city has a labor pool willing to do that kind of work with relatively low pay.
But these workers will likely find themselves without a job as the New York minimum wage takes effect:
How does taking away their jobs make them better off? The $15 minimum will push New York car-wash operators to automate like the rest of the country, denying workers the right to undercut the machines on cost. It’s already starting to happen. Amir Malki, a leading car-wash equipment installer in the region, says over a dozen car-wash operators in New York City have inquired about putting in equipment to eliminate workers.”
All we have to do to see how minimum wages can negatively impact the labor force is look to Puerto Rico. The federally impose minimum wage was a major factor in spiraling the territory into economic chaos.
Congress required Puerto Rico to bring its minimum wage in line with the US back in the 70s and 80s. While increasing the minimum always impacts employment, it was particularly disruptive in Puerto Rico, and obviously so, due to the fact that the wage scale there was significantly lower than on the mainland. Forcing wages up led to widespread unemployment, especially among low-skilled, lower paid workers.
Minimum wage advocates seek to solve a legitimate problem facing American workers: their dollars buy less and less every year. But simply mandating employers fork over more dollars is a little like putting a band-aide on an amputation. It doesn’t do anything to address the underlying problem.
Our money is broken, and we need to fix it.
The US government’s monetary policy devalues our currency, and that means less purchasing power for you and me. Simply put, when the government debases currency, a dollar no longer buys the same amount of stuff it once did. Quantitative easing debases the currency and the Federal Reserve has engaged in the practice for years.
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So, what does this have to do with wages? Well, consider this: in 1964, the minimum wage stood at $1.25. To put it another way, a minimum wage worker earned five silver quarters for every hour worked. Today, you can’t even buy a cup of coffee with those five quarters.
But the silver melt-value of those five quarters today stands at over $15.
There’s your $15 per hour minimum wage.
This vividly illustrates currency debasement. In terms of purchasing power, the value of the silver remains relatively stable, but the value of a dollar shrinks. The long-term rise in the price of silver reflects this reality. It’s the very reason people buy silver and buy gold.
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Now flip things around. Today, it takes 60 quarters to make up the $15 minimum wage advocates want. If you paid that in 1964 silver quarters, the value of the metal would be something in the neighborhood of $175!
This demonstrates why precious metals are good investments. Silver and gold retain their value as paper currencies continue to debase – thus raising prices over the long-term.
In an economy with stable money, prices tend to fall, not rise. That means more purchasing power to the poor, minimum wage workers, those on fixed incomes, and savers. But the government currently debases our currency. The politicians and central bankers claim their policies stabilize economies and protect the people from currency debasement. But in truth, these policies only enrich the politically well-connected at the expense of you and me.
Minimum wage hikes only mask the problem. We need to fix the money.
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