The Stupidity Of The Minimum Wage Screaming

The Stupid Burns

The stupid, it burns!

As the fast-food strikes that began last November in New York City continue to build momentum, hundreds of workers walked out in dozens of cities across the country Thursday in the name of higher pay and the right to unionize without retaliation.

This morning there was a report out that a handful of WalMart stores are being similarly targeted.

Yesterday The Labor Department was “lobbying” on Twitter for minimum wage increases as well.

Folks, this is backward.  Why is it that purchasing power is going down if there is no inflation?

The two of course cannot be congruent.  Further, if productivity (that is, output per unit of labor) is increasing, which is also claimed, then you should be able to buy more with the same number of dollars as well.

Both of these factors, assuming someone isn’t lying, mean you should not need to have an “addition” to the number of dollars you receive in order for your net standard of living to rise.

The problem, at its core, cannot be addressed through increasing the minimum wage.  The reason is that doing so simply causes people to be fired, because the fact of the matter is that the law of basic economic balance says that you must produce more in value for the enterprise than all costs of employing you, of which your wage is only part.

If you earn $8/hour the cost of employing you is probably closer to $12 when all taxes, costs and other factors are added up.  You must provide more than $12 in value to the enterprise or your job will cease to exist.  If any material percentage of the people in your company fail to do so the company will cease to exist and everyone loses their job.

Literally everything you do while on the job has an impact on that balance, no matter how small.  The whiz you take (removing production time from your day) is a cost.  The smile you greet a customer with and thus make them feel good about doing business with your company is a benefit.  Both are very small but they’re real and when multiplied over the entire labor base they are very material to the outcome!

The janitor in your building may appear to be an exception, but he is not.  Your leaving the coffee mug dirty instead of washing it out or leaving the coffee pot on and boiling it dry so a nasty sludge remains in the bottom causes the janitor to work a bit harder, which is a cost.  That cost must be recovered through your output.  If it is not….

And incidentally, that janitor may appear to be pure “overhead”, but that’s false too.  The wastebasket has to be emptied by someone.  The floor has to be mopped by someone.  You would not like using a toilet that was never cleaned, so someone has to clean it.  That cost may be “diffuse” and so may be the value of that job, but the fact remains that the janitor cannot make more than he or she imparts in value to the company or they will shortly be unemployed — maybe along with the rest of you!

You can strike for “higher wages” but you cannot change the common law of business balance.

A number of years ago checkout workers in grocery stores were unionized.  The cash registers were mechanical and operating them quickly and accurately by reading the printed price tags was a skilled profession.  It was also a unionized profession in most states.

The unions pressed wage demands and went on strike repeatedly to try to force higher wages.  But the marginal expense of the additional wages exceeded the value the checkout workers brought to the company.

What happened?  A new technology, the checkout scanner, appeared.  At $500,000+ per store to install them it was damned expensive, especially considering that most grocery stores run on low single-digit margins.  But a company, IRI, offered to finance them in exchange for the data that they generated on consumer behavior (what was being bought, by individual item.)

The result was the destruction of the checkout workers unions as the scanner became widespread; what was a skilled job was demoted to one that a trained monkey could perform as a sizable portion of what was formerly wage was transferred to IRI and the companies such as ICL Datachecker (that made the scanners.)

In other words the strikes didn’t obtain higher wages they instead resulted in the destruction of a skilled profession and its replacement with a robot.

Do you think this can’t happen in a fast-food outlet?  Really?

It’s already being tested — both on the front end (cash register) and at the fry cook end too.  That would, if rolled out, reduce the labor requirement for a fast-food restaurant by 80% or more.

The real problem that the screamers on minimum wage are trying to address is found here:

In other words the debasement of purchasing power through the emission of unbacked credit.

But these very same screamers are also screaming for more “easy money”, whether it be for car loans, house mortgages or college subsidies and loans.

All of this is backward.  Technological innovation over time guarantees the advancement of the standard of living if you don’t let a small group of people (which, incidentally, includes union bosses but excludes the working man in the union!) steal it all.

How do you do that?

One Dollar of Capital.

In short, the end of the ability of governments and banksters to, by sleight of hand, steal your purchasing power.

But thus far all we’re seeing is the stupidity of the American proletariat who will march and strike at the behest of those who are robbing them, asking for yet more financial rape to be served upon them by the very people organizing the strikes!

I have no sympathy for such people, for they act contrary to their own interest and are simply unwilling to bother taking a pencil to paper and verifying that everything I’ve written on for the last several years, and that which is covered in detail in Leverage, is correct.

They instead are looking for a “Savior” and the people who they’ve adhered to, both inside government and out, are in fact eating them alive.

You deserve the outcome America, for you have not only asked for it repeatedly you’re demanding it.

So be it.

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