Minimum Wage Increases Are Absolutely Stupid

By Barry Ferguson
8/5/19

Stupid is defined as slow to learn or understand. Stupid people generally lack a comprehension of fact and data. This article will illustrate fact and data. Only stupid people refute fact and data.

Yes, I know that pandering politicians say a lot of stupid things. But listening to the politicians, and the imbeciles that support them, blabber on about increasing the federal minimum wage to $15 per hour compels me to offer some intellectual sobriety to the people intoxicated on stupidity.

On the subject of raising the federal minimum wage in the US, every ‘progressive’ is supporting not just increasing the minimum wage but doubling it to $15 per hour. Sure, they cite a study published by an imbecile working at an indoctrination center like ‘Hah-vud’ or ‘Berkeley’ that determines that increasing minimum wages is mostly good with few negatives. Idiots always consult other idiots. 

The problem is we have absolute complete morons like Colorado’s ‘presidential candidate’ Hickenlooper who admits he doesn’t know what ‘GDP’ is but he does know how much business should pay workers. God help us.

Bring in the coffee and put down the liquor of cognitive incapacitation. Look at the real world. Look at fact and data.

Let’s go back to the mid-60’s and President Johnson’s ‘Great Society’ when the ‘war on poverty’ was declared and see how government intrusion into the business of businesses paying their employees has worked out.

In 1965, the US minimum wage was $1.25 per hour. The poverty rate was about 12%. Government figures.

In 2019, the US minimum wage is $7.25 per hour. The poverty rate is still about 13%. These are government statistics.

If I count correctly, the minimum wage has been raised some 16 times over this period. How have minimum wage increases helped the poor? Do minimum wage increases help anyone?

According to a Pew Research article (https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/), average hourly wages have risen maybe 10% since 1965. However, due to inflation purchasing power has not improved. And yes, the richer are the only ones getting richer as the upper class has enjoyed most of the pay increase.

The minimum wage has risen from $1.25 p/hr to the current $7.25 p/hr since 1965. That is a 580% increase! Clearly minimum wage increases do not ‘trickle up’. So, do minimum wage increases actually help the least paid workers in terms of real earnings and purchasing power?

Using an online inflation calculator (https://www.usinflationcalculator.com/) we can see why wage increases don’t help the poor. If a person purchased an item for $1 dollar in 1965, due to inflation that same item would cost $8.13 in 2019. If you are keeping score, that is a cumulative inflation rate of 713.2%. Clearly, even though minimum wages have increased to $7.25 p/hr., the minimum wage worker is still losing economic purchasing power. They are getting poorer.  

Academia and brain dead liberals don’t understand the real world. The real world follows Newton’s third law of motion: every action has an equal and opposite reaction. When the government mandates wage increases, the real world reacts. Businesses either cut hours (increased efficiency) or cut workers (globalization) while they raise prices for goods produced or services rendered.

But why do profoundly stupid people promote a minimum wage increase to $15 per hour? Well, I guess I answered the question within the question. They are simply stupid. Clearly the human species is devolving with regard to intellect. But let’s apply intellect to the argument.

Let’s use 1965 as our baseline. I will use ‘MW’ for minimum wage. I will use the above referenced inflation calculator for my math with rolling 10-year periods. 

1965 - MW was $1.25 p/hr. Let’s assume a loaf of bread cost $1.25 in 1965. A minimum wage earner could buy one loaf of bread for an hour’s work. This is our baseline. Let’s start upping the minimum wage and see what has happened over time as inflation factors in to prices of goods (US government CPI figures only).

1975 - MW was $2.10 p/hr. The loaf of bread now costs $2.13.
1985 - MW was $3.35 p;hr. The loaf of bread now costs $4.20.
1995 - MW was $4.25 p/hr. The loaf of bread now costs $5.95.
2005 - MW was $5.15 p/hr. The loaf of bread now costs $5.45.
2015 - MW was $7.25 p/hr. The loaf of bread now costs $6.25.
2019 - MW was $7.25 p/hr. The loaf of bread now costs $7.84.

As we can see, simply mandating a minimum wage increase serves to further impoverish workers because inflation always rises faster than wages grow. Question: Do higher wages instigate inflation?

The answer is they are a factor. However, I would argue the main factor in the inflationary destruction of purchasing power is the Federal Reserve who openly speak of attempting to push 2% annual inflation with their money printing. Simply put, the Federal Reserve manipulates interest rates and money supply to the detriment of the average citizen. Why then is the Federal Reserve not categorized as a ‘terrorist organization’? Just asking…

So, in the past 50 years, the minimum wage has been raised 16 times and yet the minimum wage worker has about 30% less purchasing power that they had in 1965. Stated inversely, $7.25 in 2019 dollar value would be $.89 cents in 1965 dollar value. Or, if you will, minimum wage workers actually make less today than they did 50 years ago in terms of purchasing power. Raising minimum wages does not alleviate poverty nor does it help the poor.

Now, look back at the period 2005 - 2015. I have italicized and made the text bold. While our loaf of bread increased in price during the period, the increase of minimum wages to $7.25 p/hr  in 2009 actually resulted in more purchasing power. This is the only rolling ten year period in our example above in which the worker gained. What was different in this period?

One could argue two points. One, at some point rising wages crimp the economy and we have a recession. Clearly the period between 2005 and 2015 was mostly recessionary. But, this story is far more complicated than that. We could call AOC to straighten it out for us but she’s not available right now. I think she is busy giving a tour of the three branches of Congress to the women’s soccer team. 

The second point is that inflation is the real culprit that punishes wage increases. If we stopped inflation, there would be no need to raise wages arbitrarily. Wage increases should always rise from increased productivity.

During this period from 2005 - 2015, the Fed lowered interest rates to zero. Who benefitted? Workers. Who suffered? Banks. So, can we conclude banks win when workers lose? Yes, the Federal Reserve is a private bank that works to enrich their member banks at the expense of impoverishing workers. I would also argue that the ‘great recession of the 2000’s was a banker recession. The average business and the average worker did not lose ground. Everything the Fed has done has been done to make the rich richer. Gee, I wonder if anyone could have told us this before? Oh yes, Andrew Jackson did in 1832 when he exterminated the central bank of his time. Killing inflation is more beneficial than mandating wage increases.

Conclusion: Mandating minimum wage increases in a vacuum is stupider than a sippy cup lid covering Joey Chestnut’s water cup at the Nathan’s Hot Dog eating competition.

For some quick fun, how did the minimum wage worker make out under Obama? Mr. Obama (2009 - 2016) immediately raised the minimum wage to $7.25 p/hr in July of 2009.  You know - to help the poor and all that. Well, our exemplative loaf of bread cost $7.25 in 2009 and by 2016 the same loaf cost $8.11 and the minimum wage worker was still making $7.25 p/hr. Oops, the poor people got poorer in terms of wages under Mr. Obama.

What about his predecessor Bush II? Minimum wage was $5.15 p/hr in 2001 so our loaf of bread cost $5.15. Eight long years later and the minimum wage was raised to $6.55 p/hr but the loaf of bread was now only inflated to $6.26. How about that? Our minimum wage worker actually gained some purchasing power during this period.

To be fair, how is President Trump fairing? Though Mr. Trump has not yet served 3 years as President, the minimum wage worker is again falling behind due to inflation.

Is it the politics?

No, again, it is the Federal Reserve Bank. Remember, 2001 to 2008 was marked by the demolition of the Twin Towers and a rolling banking crisis. The Fed printed money, raised rates, lowered rates, and saved banks.

So what have we learned kids?

Deflation. Good for us. Bad for banks.

Inflation. Bad for us. Good for banks.

When the banks win with bailouts, the wage earners lose due to Federal Reserve bailout money that stimulates inflation. Mandated minimum wage increases should therefore be thought of as detrimental to the average worker. Clearly, they do not help the poor. To think otherwise is just stupid.    

Oh, please send this article to every imbecilic politician who is pro-minimum wage increase. They need to know just how stupid they really are.

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article.
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