How an increase in minimum wage can reduce people’s dependency on taxpayer-funded social programs

By John Toth / Editor and Publisher

Now that football season is over, let me get your attention back on other matters.

I went on the Internet machine and started looking at the different states’ minimum wage laws. Texas is at $7.25, the national minimum, but some other states were higher.

As of Jan. 1, the minimum wage in Oregon is $9.25. District of Columbia is at $9.50. It’s $9.47 in the state of Washington; $9.15 in Vermont; $9.15 in Connecticut; $9 in Rhode Island, Massachusetts and California; and $8.75 in New York. There are more states that are between the minimum and those listed.

A friend of mine said it should be $15, like in many countries in Europe. That way, she said, minimum-wage employees could make a decent living.

That’s way too much, another friend suggested. It would make products more expensive and result in inflation.

So, I did a little more research, and found something called the Big Mac Index. How many minutes would someone have to work at minimum wage to buy a Big Mac?

Only 18 minutes in Australia, 22 minutes in France, 23 minutes in the United Kingdom, 31 minutes in Japan, and 35 minutes in the U.S. Following the U.S. are Greece, 53; Brazil, 172; China, 183; and India 347.

The minimum wage in Australia is $17.39 per hour; France, $12.22; United Kingdom, $10.32, and so on.

The price of a Big Mac in Australia is $4.32; France, $4.52; United Kingdom, $4.37.

Price of a Big Mac in the U.S is $4.79.

It’s a balancing act, but according to the Big Mac Index, the Big Mac costs more in the U.S. than in countries where the minimum wage is much higher.

So, if wages are increased, the price of a meal may be increased to cover the additional cost of making that burger and operating the business. Food cost is probably about 15 - 25 percent of the overall restaurant operating expense.

Here is my point. Even if the product cost has to increase to cover the additional salaries, it would not have to be increased significantly, maybe 25 cents to 50 cents per meal. I’m assuming that those Big Macs in countries with much higher labor costs are still being served at a profit, since the restaurants remain open.

But, if the additional wage has to be passed along, then so be it.

The increased salaries would be divided into thousands of little pieces, each piece being paid by a customer. Prices go up and down all the time. Most of us would not even notice the difference.
But here is what an increase in minimum wage would do in your community.

The additional income would be spent at local businesses buying things like clothing, food and entertainment. The fact that the money would be spent close to home would make every additional dollar turn over about six times, giving the local economy a significant boost.

Minimum-wage workers would not have to rely on food stamps and other taxpayer-funded social programs to make ends meet.

Increasing the minimum wage to a level that can sustain a family would eliminate the need for most of the current social handouts and put all the money exchange within the private sector. The government could stay out of people’s business because those employees would become self-sufficient.

The fact that I deplore social programs that can be eliminated by higher wages in the private sector is exactly why I want the minimum wage increased.

Go ahead, tack the added cost to my meal. I’d be happy to pay it, knowing that I am reducing people’s dependency on taxpayer-funded social programs.

And, dear reader, because you are most likely also a fiscal conservative like myself, is why you should also support higher wages at the bottom of the pay ladder.

I’ll guarantee you one thing. The extra money these workers would receive will be spent and will benefit communities. They will not be parked in overseas bank accounts to avoid paying taxes in the U.S.