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Minimum wage hike a threat to economy

May 9, 2013

To the editor: Question: How much do our state legislators know about economics? For the majority of them, the answer appears to be “not much....

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May-13-13 5:29 PM

MT asks "What happens when wages are artificially increased and there is no corresponding increase in the worker's productivity?" They call you a CEO and give you a golden parachute.

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May-12-13 12:11 PM

This increase won't effect the larger businesses as much as it would a smaller business because they can more easily absorb the increase.

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May-12-13 12:01 PM

The minimum wage will go up in stages. It will give businesses a chance to start laying off people slowly instead of all at once. Something needs to be done to help the smaller businesses stay afloat and maybe make some profit but now if this increase hits the smaller businesses that are struggling I afraid some will not make it.So there will be less places to work unless you work for large businesses owned by corporations.

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May-12-13 9:07 AM

Ulm: agreed. Small businesses make up 90% of the nations workforce. For every greedy, hungry, non-caring CEO of a large corp, there's hundreds of small business owners that care about small towns, people.

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May-11-13 8:39 PM

They see all employers as money hungry, immoral, detached CEOs. Many don’t consider employers like me. I care about my staff. I try to make them succeed. All the business men and women in this area that I work with are seeking ways to reward their achievers. We are not the minority.

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May-11-13 8:38 PM

First of all, raises for these staff are no longer an option. I will now be taking the money that we can afford for payroll and paying 15 year olds more. Second, imagine the shift in morale for our adult staff. There is no longer opportunity for them to grow. All the ability for me to reward monetarily has been forced onto the unskilled staff. Third, my maintenance guy, who is now not anticipating any raises, has a paycheck that will incrementally be worth less. I will not be the only business to raise my prices for the customers. His paycheck will buy less at the grocery store, gas station, and retail shops. Imaging this scenario is overwhelming. There are machines that can take the place of many of my staff. These machines have been too expensive to consider until now. The incentive to automate has never been more appealing. In this case I will be employing 25 people in 2013 instead of 50. The problem with this issue is that many think it is an issue of compassion.

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May-11-13 8:37 PM

While I feel that we may survive a minimum wage hike in 2013 most of our staff, not just our bottom-line would suffer. I do have staff that make minimum wage. These are dishwashers, brand new cooks, and servers. The dishwashers and cooks do not make tips and are all high school kids. The servers make tips and are currently required to make 6.15 an hour. This may not change with a minimum wage change. All of these staff are high school kids. These are the only people that I employ that would benefit from the minimum wage, providing however, that I don’t remove their positions. The rest of the staff; the full-time maintenance guy who makes $13 and hour but deserves $20, the single-mom who works 30 hours and only makes $10 an hour because she is new but I hope to be able to increase significantly if she continues to be successful, and all the other people who are looking to make a career out of working here, are going to be the ones who lose.

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May-11-13 8:37 PM

Statistics when referring to the economy can be overwhelming because they are inconsistent and easily manipulated by their presentation. I would like to provide a simple real world example from a Southern Minnesota business that demonstrates the detriment that this bill would have on both the business and the employees. I run a business that employs about 50 people. Of these 50 5-6 are full-time adults with the rest of the staff being a mix of high school kids and students working through college or supplementing income while working starter jobs. A little back ground. About 5 years ago this business was not doing very well. It had taken a hard hit from the economy and was fighting to stay in the black. I am confident that if the minimum wage would have been set at $9-10 an hour we would have been forced to close our doors.

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May-11-13 12:44 PM

MT, it is Minimum Wage that is a threat to our economy. Not because we have one, but because companies pay it. When people don't earn enough at work to support themsves, it is the government and ultimately the taxpayer who foots the bill. Many of the companies who pay minimum wage make billions and pay very little in taxes.

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May-10-13 10:36 PM

MNCommonsense, remember that the CEO of Costco also does not demand a lavish salary, so there is more money to go around. I wish we had a Costco. Maybe they can buy the Walmart building, since half the cars in their lot belong to employees.

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May-10-13 6:16 PM

The majority (over 62%) of minimum wage workers live in households that are well above (double)the poverty line. I have two teenagers living with me as proof. Only 4.7% of our workforce is comprised of minimum wage workers trying to support a family.

The effect of raising the hourly minimum wage has a net negative effect on workers and (would be) workers at that pay level. When wages are raised workers are more likely to have their hours cut. Secondly, a business is less likely to hire more workers leaving those looking for work with less opportunity to find a job.

If raising the minimum wage truly impacts poverty then why hasn't poverty been reduced with past increases to the minimum wage ?

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May-10-13 1:46 PM

JReader let's talk about young people, especially young families.

Analysis of minimum-wage workers show that 20 percent are teenagers, about 50 percent are full-time employees and about 60 percent are women. The vast majority have household earnings below the median, which was $50,054 in 2011.

Those working full-time for minimum wage earn about $15,000 per year. This income puts a young parent with two children well below the poverty line of $19,530 for a family of three. It's even worse for tipped workers, making it no surprise that more than 20 percent of restaurant and service workers live in poverty.

Not only would raising the minimum wage reduce poverty, but research has shown that erosion of the minimum wage leads to increases in inequality.

We should ask why we have a minimum wage in the first place. Surely the answer is that people (young people) who work full-time year-round should be able to keep themselves or their families out of poverty. Maybe I'm wrong?

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May-10-13 1:22 PM

Oh Michael, I'm not done with you yet.

Have you studied the Costco Model, say vs. the Wal-Mart Model?

Costco Wholesale Corp. who is in direct competition with Wal-Mart has operated under the premise that a loyal, well-compensated workforce means a more efficient and productive one. Costco for years has voluntarily paid well above the minimum wage. A 2004 Business Week study ran the numbers to test Costco's business model against that of Wal-Mart. The study confirmed that Costco's well-compensated employees are more productive.

Paying workers more often leads them to feel better about their work and reduces stress, both of which increase productivity. And when workers produce more, employers' labor costs fall.

Costco also enjoys rate of turnover far below industry norms.

There are many examples like Costco's, where American companies have "artificially" increased their employees pay and reaped the benefits from it.

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May-10-13 12:58 PM

How many young people do your examples really cover - babysitting and mowing lawns ? Really ? Try looking at food service and retail if you want to start a conversation about minimum waged jobs for young adults.

Far more young people age 24 or younger are negatively impacted by increases in the minimum wage. They are also the largest single group working at minimum wage in our country. Numerous studies have shown that increasing the minimum wage costs our economy jobs. This makes it more difficult for a young person with no skills to get a job simply because employers will have fewer of these jobs to offer.

Young people may still be desired by American businesses - the problem is there will be fewer jobs to fill because of the intervention of our government.

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May-10-13 12:53 PM

Now Michael let's address your "what happens when wages are artificially increased" comment.

The minimum wage stays the same if Congress doesn't change it. Congress sets the minimum wage in nominal dollars, so it doesn't keep pace with inflation.

Because the cost of living is always rising, the value of the new minimum wage begins to fall from the moment it is set. In fact, today's minimum wage of $7.25 buys less than the minimum wage did through all of the 60's, 70's and much of the 80's. Raising the minimum wage to $9 an hour in 2015 would give us about the same real value as the $3.35 minimum wage of 1981.

Although the minimum wage has been raised 22 times since it was established, those increases are needed to restore its inflation-eroded value back to its earlier real level.

Congress should set an inflation-adjusted or -indexed minimum wage. It would not only be more fair to workers but efficient for government.

But, do you really care about what is "fair&quo

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May-10-13 12:27 PM

"Devastating" for our young workers, really Michael? I wonder if you really understand what you are talking about.

The Fair Labor Standards Act established a minimum wage for the United States in 1938 and criteria that determine who must receive it.

A young person who mows your lawn or babysits isn't covered as long as they don't work more than eight hours per week or get paid more than $1,700 per year by one employer.

Some employer, such as small farms, aren't required to pay minimum wage.

There are minimum wage exceptions for full-time students and the disabled.

Those younger than 20 can be paid a sub-minimum wage of $4.25 for up to 90 days while these inexperienced workers learn the ropes.

And young workers who receive more than $30 per month in tips are required to be paid only $2.13 per hour.

Raising the minimum wage doesn't change any of the above, young people will still be desired by American business.

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