Saturday, July 29, 2006

More or less in poverty?
from the mind of  Evan Kruse.

House OKs minimum wage increase - via MSNBC.

What does this actually mean? I think that there will be no direct effect on us in the Northwest as our local minimum wages are much higher than the federal minimum. But... we live in an integrated economy.

One thing is for sure, and that is the increase in price levels... which means that my buck fiddie today will be buying significantly less a down the road. The US as a whole has been fairly lucky (or, perhaps it isn't luck at all, but good management of the economy) with low inflation.

Another thing is for sure... in one fell swoop, our number of citizens at poverty level will instantly increase. If price levels change roughly equally to the raise in minimum wage, we will merely be demoting the workforce that is 15 or 20 cents above minimum wage back down to the base. That's unfortunate.

We will also be encouraging 'under the table' employment. As the legal pay rate increases, the incentive for an employer to not report employment, not file taxes, and look for someone who is willing to work illegally goes up. This will actually increase the demand for illegal immigrants. And, since the demand for illegal employment seems mostly endless, I doubt they'll be surfing the correct side of the supply/demand curve that would naturally incrase wages. In order to increase wages in the marketplace, one needs to have a labor shortage.

Locally, this will probably benefit Oregon and Washington. By raising the minimum wage elsewhere in the US, basically, one can view it as reducing the minimum wage in a state where the state minimum wage is higher. This will only make things more competitive, and should be a benefit for regional economy.

My verdict? I see it as a way to buy votes. In all reality, the people who will be effected by this legislation generally don't get the fact that it is a null and void change in their lives. In fact, for the middle class (majority of small business owners) and anyone who likes to travel internationally, the increase in wages will lead to a decrease ability to do business and a decreased value of the Dollar compared to other currencies. Oh, yeah... and it will be a good incentive to ship more jobs overseas.

Aren't the liberals againt shipping jobs overseas?

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