Increasing the minimum wage is good economics

Republicans relentlessly oppose raising the minimum wage to a reasonable and fair living wage.  For millions of Americans, this means no way of escaping poverty for themselves and their families.

The argument is usually an economics one, but Republicans are completely ignoring half of the picture.  They only see the $15, but unlike milk or electronics, wage-earners put that money right back into the economy.

A low income person’s paycheck is usually entirely spent by the time of their next payday.  Think about where this money goes.  They buy gas and food, clothing and household goods.  If they have anything left over, they may even see a movie or go out to eat on occasion.

You see, they are putting the money right back.  This is how an economy works!

Compare this to the way a higher earner spends.  He or she may have a savings account, or a few of them; as well as investments in stocks or bonds.  This is money that stays idle in the hands of banks and Wall Street.  It does very little for our economy.

Opposition to raising the minimum wage, though, is not really about economics, but more on that in a bit.

The average business spends about 30% of its money on labor.  This means for every dollar a minimum wage earner spends, .30 goes to another worker, possibly another low wage earner.  That means $1.30 for each minimum wage dollar has already gone to workers, but it doesn’t end there.  Successful businesses often spend much of their profit by reinvesting in their business.  This means they spend money buying new equipment, remodeling their store, and advertising.  This creates jobs everywhere.

And much of this spending is impossible without the increase in revenue they receive from the spending of minimum wage earners.  Without a doubt, raising the minimum wage is good economics.

A common right-wing argument is the false notion that businesses will be unable to employ as many people if they have to pay a living wage.  This is simply misunderstanding the basic economics of the situation.

As I’ve noted, a higher minimum wage means people have more money to spend.  And they will do just that with it–spend it.  This means businesses make more money.  The suggestion that they won’t be able to afford the higher wages in the first place is just silly.  Not only will they make enough more to pay the higher wages, they’ll also have more for other business expenses and even more for business owners.

The reality though is that the real reason Republicans oppose raising the minimum wage, and even the very existence of minimum wage laws is, you guessed it: race.  They can make all the arguments they want that kind of seem rational and logical, but when you break them down, they’re missing huge elements of the economics.  And they do so deliberately to conceal their hatred.

Republicans don’t want to raise the minimum wage because it may help black Americans and other minorities out of poverty.  To them it means breaking down a socially created barrier on race.  The wealth gap between the average white and black worker is systemic segregation created by capitalism.  Those with conscious or in many cases, subconscious racist tendencies don’t want this barrier to be broken.

Keep this in mind anyone tries to claim that increasing minimum wage will hurt the economy.  That’s not their real concern.  Here is some enlightening reading on the racist history of minimum wage resentment.


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