Sunday, July 15, 2012

Economics Not For Dummies part 1

Economics is a tough subject to study for a number of reasons. For one thing, it's kind of boring. When I had trouble sleeping while in college, I would start to read my economics text. Problem solved. Hey, the don't call it the dismal science for nothing. But, truth be told, if you wish to understand many things that go on in politics and business a reasonable understanding of economics is a necessity.

Just before he took ill, Jesse Jackson Jr. proposed an increase in the minimum wage. A lot of people jumped on board and cheered this idea. The results of such an increase today would only make a bad situation worse. Because it would be more expensive to hire help, employers would stay with the staffing that they have. In some cases where the business is already operating in the margins, they would lay off their least skilled employees. This would devastate the summer job market for young people especially in the minority community.

So what is a minimum wage job. It is actually not a job, yet. Someone that is hired at minimum wage is told to show up ready to work at a date and time. Since they have no skills, knowledge, or training, showing up at the right time is a step ahead. They are the assigned a job. Something basic to see if they can follow orders and take an assignment to completion.

If they fail at the basics a couple of times they continue to mop floors and clean rest rooms until they quit. If they succeed, their next assignment is at a higher level. Ninety days of success usually brings about a raise in wages. Along with this, continued responsibility.

Minimum wage is not and never was a living wage. It is and always has been a starting wage for those that have little or nothing to offer an employer other than a desire to do better. It is for kids starting out in the workplace to earn money for college or to pay car insurance or to contribute to the family.

If you are thirty years old, healthy, and have a child and you are dependant on minimum wage, you have made some serious mistakes. You probably have a problem with your work ethic or need job training. If you don't have family support, you really need some help. That help is there for you as it should be. Increasing the minimum wage is never going to correct your situation. Nor should it.

In a recession, or even when business is slowing threatening to go into a recession, businessmen need flexibility. An increase in minimum wage takes that flexibility away from them. It drives the economy down. The marketplace will set wage levels. If you are a good worker and have skills, your services will be in demand. And the worker will have the pride of knowing they are needed in the workplace.

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