Fix or Farce: Obama Imposed Federal Employee Minimum Wage Increases Will Wage War on Citizens Working in the Free Market

There are rumors Pres. Obama plans to increase Federal employee minimum wage via executive order.  One could argue whether Obama actually has the authority to do such a thing.  Additionally, Congress, if it had the will, could legislate federal pay according to the market so it does not come into conflict with it. That aside, since doing something about it would require men (and women) of resounding character, let us get to the issue of minimum wage and how it effects the economy.

Raising the Federal employee minimum wage will cause:

MORE Federal debt to pay the wages;

A reason to justify Federal spending;

A reason to increase the debt ceiling;

A reason to increase taxes;

A sense of entitlement from employees (whose wages already average higher than the free market for the same work.) who have not earned a raise:  This is counter intuitive to motivation based upon excellence.  Conversely, left to its own devices, the Free Market System actually grows income better and based upon value of productivity which in turn spurs economic growth naturally. The graph below shows historical numbers in times of growth calculated without minimum wage interference and those with interference by government. Notice, particularly, the steady incline with greater momentum when productivity (Free Market) governs minimum wage levels versus mandated minimum wages. Also notice the erratic spikes and adjustments caused by government intervention in the federally mandated minimum wage. Thirdly, notice the counter productive drop in real wages, meaning that over time the costs of living outpace the wages in the government mandated minimum wage history.

Proponents of raising the minimum wage believe raising the Federal employee minimums will signal states to follow suit.
 
In reality: The Federal government (which is not actually part of the Free Market System) will become an even greater competitor against the Free Market. That means you and I and everyone else you know working for anyone other than the government will struggle as businesses struggle with unfair and illegitimate competition.



{Cr for caption: Rgcombs]

History shows a number of  negative market conditions prevailing every time minimum wage is increased: 1.) Either companies must cut expenses somehow; or they must raise the costs of goods and services to cover the costs of doing business. This ultimately hurts those at the bottom most.
Defenders of minimum wage will argue that  actual low income (real income) doesn't really soar with minimum wage increases so the effects are negligible. I cant argue this point: In fact, I agree: Minimum wage increases do not solve low income problems. They maintain them.

This is because minimum wage also increases inflation throughout all other wages. All incomes will will  rise to distinguish value between skilled and unskilled labor. Proponents of minimum wage increases claim that very few people in the US actually earn minimum wage.  They fail to acknowledge the effect on higher wages when the minimum wage is forced to increase. Put again, forced minimums only increase the entire spectrum of wages, leading to nothing more than inflation and causing frustration among the poorest sector of wage earners. Were this not so, low or unskilled job wages would have already caught up to the wages of higher skilled jobs.

History also shows a pattern of slump in the economy whenever the wages are mandated to increase. Defenders of minimum wage claim because increases are small, the effects are negligible. They do not account for the effect on businesses that survive on low pay and unskilled workers. These businesses also have a rapid turnover and higher training expenses because their workers are unskilled (retail businesses for example). Their argument is completely moot with the current intention to raise minimum wage at least $3 in one hike.

Moreover, history shows employment growth slows with mandatory wage increases.  Businesses recoil. Growth and hiring slow or stop as they adjust to the forced added expense. (Notice the spikes, then sudden drops, in the graph with every forced wage increase.)

Ultimately, the only one that benefits from minimum wage increases is the Federal government via income taxes. This effect is not lasting as politicians do not slow spending.

This is not a fix, it's a farce. Numbers don't lie: People lie about numbers. It pays, literally, to note the difference.