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The minimum wage and the Third law of motion

December 7, 2013

Sir Isaac Newton originated the three Laws of Motion. The Third law of motion is that for every action there is an equal but opposite reaction. That is never more evident than when government tries to promote income equality.

It seems strangely fitting that while there are marches demanding the doubling of the minimum wage, and the unemployment rate has supposedly fallen to 7%, Rep. Earl Blumenauer (D-OR) has introduced legislation to double the Federal gas tax.

Leaving aside whether that bill would succeed, or even whether any substantial portion of that money would actually make it to America’s roads and bridges, the act of introducing it shows the folly of assuming that raising the minimum wage would actually lift people out of poverty.

There is a reason why when the minimum wage was $1.05 an hour, you could buy five loaves of bread for between fifty cents and a dollar, and today, with the minimum wage at $7.25 a single loaf of bread is between $2.50 and $4.00.

The progressive left push to price oil-based fuels out of the market by keeping or at least encouraging gas prices to remain above $3.00 a gallon means that many people are driving less. More fuel efficient cars means people are buying less gas, or maybe no gas at all. Keeping the lid on the economy means there are fewer people working full-time. Increased insurance costs for the middle class means less money available to buy anything. Ergo, there are less taxes flowing into the U.S. treasury, whose cupboards are already too bare to support all the programs we have to fund from taxes.

Nothing exists in a vacuum. Even assuming that the federal minimum wage does go up to $15.00/hr. it will not lift people out of poverty. At best it will simply temporarily halt the slide of more people into poverty.

Just for kicks, let’s assume that the minimum wage does go to fifteen dollars. Let’s say that you are a 27 year old single person working 40 hours a week for the minimum wage. Your annual gross income would go from $15,080 to $31,200. But how much of that would actually remain available to you to save, or invest, or even just spend on a few nonessential purchases?

Let’s just look at another government program, Obamacare. Currently our hypothetical single person is at about $131% of the federal poverty level, and would be eligible for a subsidy of $2355 per year to apply to a Silver plan costing $2657 a year, for a net cost of $302. Upon receiving $15.00 an hour, this person would be at $272% of the poverty level. According to the Kaiser Foundation’s subsidy calculator, upon receiving $15.00 an hour, there would be no subsidy, and our newly flush minimum wage worker would now pay the full $2657 in premiums. And that doesn’t include the higher out-of-pocket costs.

There’s old man Newton’s law in full effect. You get more, but everything costs more. And that’s just one government program. Prices and taxes are not going to stay where they are today. When things cost more to produce, prices go up. When people and companies make more money the government will demand more taxes to both balance the books and give away more goodies.

The ONLY way that raising the minimum wage could even remotely guarantee that the worker would actually be able to maintain that temporary higher standard of living is for prices and taxes to stay exactly where they are today, and that won’t happen. Even if the government instituted price controls, they would not apply to taxes.

The only real alternative to poverty is to become a more valuable employee, and for businesses to be successful and profitable enough to need those employees. Minimum wage jobs were never designed to be anything more than a stepping stone to acquiring higher pay through better education or better skills. Hod carriers become architects, burger slingers get a degree in marketing or business administration, etc. etc. Those who can move up the ladder need to know that if they succeed, the government will not create an underclass of economic invalids that they have to support even when it isn’t necessary.

The Third law of motion demands that the more government gives the more it has to take. At some point, the scale is so heavily weighted on the outgo side that the intake side has to catch up to maintain a balance, or the whole thing bottoms out on the wrong side of the needle. Look for a lot more direct tax hikes and fees from the government, because that’s the only reaction that keeps the country on its present course in response to decades of government that relies on giving things away to stay in power.

There is a vast difference between taking care of the truly poor, i.e. those people that for whatever reason will never be able to attain or maintain a decent standard of living , and creating utopia. The first is our human responsibility, the thing that separates us from the animal world of survival of the fittest. The second is a fool’s game. It’s time we learned the difference. 

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