Minimum Wage = Minimal Results

Fool's Gold!

Unions are the bane of narrow-minded thinking. In Omaha, as many know, two Starbucks stores closed due to as strike over wages (https://www.wowt.com/2024/12/24/omahas-two-unionized-starbucks-locations-close-workers-join-strike/). They complain about the CEO making too much money in the process as can be expected from an organization in alignment with Democrat Socialists of America (https://omaha.com/news/local/business/unionized-starbucks-employees-strike-outside-2-omaha-stores-as-part-of-nationwide-effort/article_bdb8d0cc-c224-11ef-9eaa-0b8795f7ef69.html). How tone-deaf can they be?

Obviously, consumers are paying way too much for a sugar-bomb drink with a hint of coffee flavor. Instant coffee is cheap, as are K-cups, but if you insist someone make it for you, try Scooters Coffee instead (https://www.scooterscoffee.com/). Starbucks is all romance relying on the type of consumers who have no price sensitivity. Unions think they can win this but they are already losing.

But what unnerved me today was this article refuting some articles from the Hoover Institute (https://www.dropsitenews.com/p/the-minimum-wage-claims-you-keep). The article makes some valid points but it is missing what is entirely wrong about minimum wage.

As the saying goes, “Insanity is doing the same thing over and over and expecting different results”, so why do we keep raising the minimum wage expecting things to improve when they do not? It does not eliminate poverty, and it does not generate prosperity or wealth. The wage worker barely advances, if at all, because the wage increases push inflation meaning the increased dollars received are only able to purchase less. At the same time, automation is adopted making workers more productive and efficient, but in the process, people have to adjust or fall behind.

A worker is paid $2 an hour and produces two widgets an hour. The workers protest they should be paid $10 an hour. So now the business has to figure out how to make the worker do ten widgets an hour, or hire no more workers or raise prices on products if not both. Capitalism does this with great capacity and often does it slowly without upsetting anyone. Yet the worker is often left off where they started as prices are now inflated and the purchasing power of their dollar drops: but some people like being a hamster on a wheel.

The minimum wage studies are all flawed because businesses generally do not take on politics. When someone merely screams for a hike in minimum wages, businesses already forecast how they will adjust when numerical wages rise. Virtually all the studies fail to notice this impact as they are short-term studies, not long-term.

Those self-check-out kiosks eliminated cashier positions but created more sales, meaning more employees are hired to stock shelves. The downside is jobs which are worth less than the minimum wage law are abolished without exceptions. The automation is often afforable because there are no payroll taxes to pay and automation never needs a break. This is why homelessness and panhandlers are increasing. These were the people who had some help but needed a bit of money for food provided by a small job, not wild ambitions. They lost assistance because they could not pay for their food. The digital economy has made all of this more complicated.

The Longshoremen do not get this. They are threatening to strike over automation (https://apnews.com/article/longshoremen-strike-ports-dockworkers-agreement-ila-f136bdcd52738e94f2938aaa79a1fa2a). I hope they fail. They should instead call for an end to the Jones Act, but that is another story. The reality is, the Longshoremen are holding the US economy hostage for their own greed. They must be defeated. Automation will lower the prices for everyone and provide safer workplaces for employees.