12 05 2014

Authored by William Robert Barber

Let’s give some thought to the mandated increase of the minimum wage: The Obama idealists and their progressive brethren, while arrogantly flying the pennant of fairness, have, with righteous indignation, declared that moral purpose is their impetus. In addition, they cite the Keynesian multiplier theory as the economic reasoning for raising the minimum wage.

Well alright… Aside from the confounding determination (held as virtuous by many) that government has the right to infringe on the labor for hire relationship with management, the unforeseen looms just over the horizon. It is a conspicuous fact that government relies on the profitability of private enterprise for its revenue. A deliciously fat and saucy portion of government revenue is derived from taxes garnered from a private company’s GAAP definitive of profit.  When government imposes either normative or excessive regulatory or labor cost upon enterprise it attenuations its very own tax revenue. Often the (regulatory) administration that enforces rules and mandates their interpretation of legislation upon enterprise simply increases the cost of governing bequeathing nominal if any benefit to the taxpayers. As to labor’s advantage of earning more money for the benefit of government’s taxable revenue because of our progressive tax system, the increase of earnings to labor adds zero positive to government taxable revenue. 

If the Keynesian multiplier is founded on the principle that the higher the mandated pay the more the economic stimuli, then… wait a minute — of course that could not be the case. Oh yes, it’s the Keynesian expert that will fix the mandated amount that management should pay for labor. Only the Keynesian wonk is smart enough to evaluate and fix the metrics of labor cost to management profit.

But once that ratio of the perfectly balanced minimum wage is fixed by the Keynesian expert, the concept is that those earners will spend their net increase of funds instead of saving it. Well, let’s give that concept some consideration: The net after tax difference between earning $7.50 an hour and $10.00 an hour is XY&Z. The earning differential has many subjective elements such as the state where the earner is domiciled, single or married, with children… the exceptions are numerous. Withstanding, there is no doubt that an increase in gross money is a reality. And so is the factual that taxes will increase every payday; these taxes will be withheld until the filing of ones taxes on April 15. Wherein monies withheld will be refunded. It is then — and only then — that the minimum wage earner receives a significant depository of cash. 

Labor is a commodity. The pricing of labor has wide fluctuations by sector, era, and a variant of other prompts and instigators of flux. The only pure pricing of labor is at the pleasure of the market; if — or should I say when — the government establishes a minimum wage, the market forces ally with technology and a new metric is implemented.

The basis of any agreement is mutual satisfaction; even if the satisfaction is momentary, what must pass the muster of sensibleness is an agreement amongst all participates. This “must” is the required “something” the government cannot impose.

If government could ever free itself from its tether to conflicting interest and the politics of politicians striving to staying in office instead of paying attention to governing, 1-2-3 may replace the time honored #@3&5&*. But then again, deduction, logic, and pragmatism are easily trumped by the word “fair” which is particularly effective when rhetorically toned by an orchestra of righteous indignation.   




Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: