Race and Economics I

Race and Economics I

It is long known and consistently demonstrated that when wage increases are imposed upon business, fewer workers are hired.  The employees that remain face inhumane demands for increased production and their hours are often cut to part-time, so the employer can avoid  mandated benefits for full-time employees.

The facts are that when government forces businesses to increase pay for workers, rather than letting the competitive market govern this matter, fewer people are employed.

This is not all bad for the socialistically inclined government. After all, they can now add the unemployed to the welfare roles.  This is one way the government can grow and increase its control over the population.

Neat, huh?!  Such a government creates a modern form of slavery (for all races) which is acceptable to those who are already dependent upon the government and those who do not understand the destructive economics of the mandated minimum wage.

V. Thomas Mawhinney, Ph.D.

The following is a quote by Walter Williams:

Unlike in prior times, most blacks are not poor, but a large percentage still are. Decent people promote policy in the name of helping the poor and disadvantaged. Those policies can make their ostensible beneficiaries worse off, because policy is often evaluated in terms of intentions rather than effects. That is a direct result of how people view the world. Consider popular support for increases in the minimum wage. If one believes that an employer must hire a certain number of workers to ge a particular job done, an increase in minimum wage means that workers will earn higher wages and employers lower profits. However, if the visionary sees employers finding substitutes for higher-priced workers…such as automation or relocating to a lower-wage environment…he might opposed increases in the minimum wage on the grounds it will cause unemployment for some workers. compassionate policy requires dispassionate analysis. Policy intentions and policy effects often bear no relationship to one another ( p. 3).

Race and Economics by Walter E. Williams

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One Response to “Race and Economics I”

  1. Gonzo Says:

    Minimum wage increases have an interesting Butterfly Effect. Having been involved in real estate for a stint, I watched as two minimum wage increases provoked the following wave of responses regarding housing:

    1) the lowest paid employees get an increase, and spend it all, as they usually do.
    2) next tier jobs get increases in pace with the minimum wage in order to keep supervisory/slightly more advanced paying jobs at pace. They to tend to spend it all too.
    (2.5) the middle class ends up with a pay raise at about half the fraction of the lower class.
    3) the positive economic impact from additional spending results in the increase purchasing action on low budget housing, which has a domino effect of driving the house prices up for specific ranges as people sell their older homes to buy higher priced homes. This wave starts with low priced homes, then next level priced homes, then next level…etc.
    4) the wave tends to peter out when you hit the upper-upper-middle class homes and the wealthy, who do not get any advantage from the increase in house prices. Boo hoo.
    5) new homes are built – now the wealthy feel better.
    6) prices for everything goes up, and lower class is no better off, other than those who took advantage of housing market fluctuation and rode the wave of high sell price and lower buy price to move up, (I’ve rode three of those waves to the high class neighborhood I’m in now with little comparable difference in monthly mortgage cost – adjusting for inflation).
    7) the middle class ends up closer to lower class, as their pay increases did little more than keep pace with inflation.
    8) the wealthy don’t lose out, as you assert, as inflation counters minimum wage increase.
    9) most people will feel a sense of profitability as they see their home values increase over time, although in reality, it is really just an inflationary indicator.
    10) people seem to think the economy is going good, and spend happily.

    So I don’t think there is a direct link between min wage increases and businesses suddenly not having enough money to hire more employees. In fact, business probably have benefited to a large degree.
    I DO think that the artificial inflationary effects have lead, at least in part, to the economic bubble burst during GWBush’s second term, and creates an artificially wider gap between the expectation of the avg American worker, (pay wise), and the dirt cheap child labor competition from third world countries in the global economy – a labor pool that American businesses have flocked to like flies to fresh trash on a hot summer day – yet another benefit realized by big business.

    So, in the end, to answer your question, do I think its helped or hurt America – I’d say long run, hurt.


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