The Truth in OH-2 CD

The voice of TRUTH for politics in the Second Congressional District of Ohio.

Monday, November 13, 2006

The Negative Economic Impact of Ohio’s Minimum Wage Increase

By Nate Noy

To say “I told you so” is a major understatement. The suckers (i.e., voters) of Ohio that voted for this last week will soon realize the horrible economic ramifications of such an uneducated decision.

To make this point let’s take a look at four hypothetical companies and see how they will react to the minimum wage increase.

Company A: Simply passes along the price increase to all of its customers. The average restaurant spends about 20% in labor costs. This should correlate to approximately a 6-7% price increase for ALL consumers. Here’s a LINK to a recent story.

Company B: This type of company will cut all benefits to workers to offset the price increase. Kiss that health care plan good bye.

Company C: Sorry about everyone’s luck for this type of company. They will close up shop altogether and send the jobs to KY, PA, MI, IN or worst of all to India, China etc.

Company D: This is the most likely outcome for most companies. Say this company had 100 minimum wage employees and a budget of $515 an hour for these workers. The budget WILL NOT CHANGE. Assume no tax increase for a moment (not a real world assumption since the FICA contribution for a company will also now increase on a per employee scale.)

Company D decides to spend the same $515 per hour. But now instead of this being split 100 ways it is split $515/ 6.85 per hour OR 75 ways. Great news for the 75 people that get to keep a job, a whopping $1.70 per hour increase. But what about the 25 suckers that are now unemployed? I bet they wish they still had that $5.15 an hour instead of $0!

The above only captures a small fraction of what is to come for Ohio. Think about the worker that started at $5.15 who has worked hard and three pay raises later is at $6.50. Now he or she will get a bump to $6.85 along with the same bottom feeders that have been making $5.15. How long before this $6.50 worker quits because all the work he has put in has been wiped out by government intervention.

And just wait and see what happens to the inflation rate folks. If you are on a fixed income you’ll soon start to see what this was such a bad idea.

The only thing that can help Ohio at this point is quick passage of a Federal Minimum wage increase. If this does not come then expect Ohio’s economy to continue on a fast track into the abyss.

Maybe some day liberals will take a minute to study some basic principles of economics, then again I guess that is too much to ask since they are all in love with democracy.

Keep in mind we pledge allegiance to the flag of the United States of America and to the REPUBLIC for which it stands. Not the democracy!

Democracy is three wolves and a lamb voting on what is for dinner.

Some decisions were not meant to be left up to the people to decide. Our Founding Fathers knew this when they wrote our Constitution. Too bad the this point will hit home far to late for the suckers that listened to the liberals and helped destroy the great state of Ohio.



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