Army Bob: $15 minimum wage for the oppressed proletariat

Those of us who have lived a bit of history remember the days when folks with better than average credit were paying 15% interest on home loans. A time when inflation was 14% (1980) and we had terms like the misery index and stagflation.

President Richard Nixon had put wage and price controls in effect, the holy grail of socialism, to no avail. President Ford handed out WIN buttons, “whip inflation now.” Our economy was in a mess and getting worse. President Carter’s efforts towards socialism and governmental economic controls were ineffective and caused the loss of even more jobs. His taxing small aircraft and large boats at an increased rate put thousands more out of jobs.

President Reagan came with his free market, less government control philosophy and finally ended it.

The current campaign to raise the minimum wage to $15 per hour just may cause us to revisit those truly horrible times for the national economy. Let’s look at dreaded cause and effect: at $15 per hour a minimum wage worker will make $28,800 per year, and an Army Private makes $22,560. So we will need to increase their pay. The cost of labor will go up, so what would you do if you owned a business and wished to remain in business? You will look to cut labor costs or increase prices, both bad options for the overall economy. If you work for an employer and have for years, you are paid more than an entrance level employee, so if the entrance pay equals yours you will demand a pay increase — you are worth more than a new hire after all. The spiral of inflation will start as it always does when government, not the market, artificially controls the economy.

We have seen the rise of automation; Automatic Teller Machines (ATMs) have replaced tens of thousands of bank tellers and we pump our own gas at self-service gas stations, replacing the service station attendants with automation. Manufacturing has replaced many people with robotics.

The main reason we do not replace more workers with automation is cost; as the cost of labor increases, automation becomes a more viable alternative. We are currently seeing folks ordering and paying via a smart phone at some fast food outlets, an ordering kiosk replacing the counter staff. Amazon is experimenting with drone package delivery, replacing drivers and trucks. Common sense will dictate at $28,800 per year starting pay plus government mandated benefits paid by the employer, we will see the inevitable rise in automation.

Products produced in China and India will become even cheaper and drive even more American factories out of business or offshore.

The increase in minimum wage will have the predictable cause and effect. The road to hell is paved with good intentions; those of you who are liberal progressives will cheer the increase in pay as you put millions out of work. The government will need to pay more in benefits to the increased number of unemployed, so everyone’s taxes will increase. As automation replaces workers, the entire economy will suffer; every four employed folks generate a job in supporting or serving the people who are working. For every four jobs lost, five folks will become unemployed.

The cause and effect is cumulative; the drones that replace the delivery person also replaces the delivery truck, so United Auto Workers members will lose jobs. The drone does not need uniforms, so the folks that make the uniforms and all products that support the delivery truck/person will lose jobs. The drone does not need gasoline or oil changes or much maintenance, so more jobs are eliminated. As more good folks lose jobs, purchasing power goes down; they do not purchase products so more jobs are lost.

Our friends on the left will hold events honoring those who fought for the $15 minimum wage increase; awards will be given and wonderful speeches given, backs will be slapped and millions will lose jobs. High levels of unemployment will result in higher crime rates, more domestic violence and drug and alcohol abuse; got to wonder how all that is a good thing?

Free enterprise Democracy works every time it is tried, as it has in the U.S. for 240 years; Socialism fails every time it is tried.