Let's say Joe owns a newspaper company. He produces hand-delivered local newspapers that he sells for 50 cents each. He finds 8,000 customers that buy his paper every day, which provides $4,000 in daily income. Now, let's say that Joe spends $1,000 a day on fees to the reporters and journalists who write the stories, comics, and whatever else. He also spends $1,000 a day on rent for his building, paper, ink and computers -- everything he needs to create, print, and package the papers. So Joe now has $2,000 worth of profit left and 8,000 papers that need to get from his building to each customer's door.
Joe decides to hire 10 guys to deliver his papers. He pays them $10 (let's say this is minimum wage) an hour to deliver 800 papers each over 8 hours (10 guys times 800 papers = 8000 papers). This costs him $800 (10 guys @ $10 per hours x 8 hours = 10 x 10 x 8 = 800). So Joe now has paid $1,000 on writers costs, $1,000 on building and supply costs, and $800 on delivery costs, leaving him with $1200 profit each day. Joe is making a good living. ($1200 a day times 365 days = $438,000 a year)
Now, these 10 delivery guys hear how much Joe is making and feel cheated. By the time they pay $1 for bread and $2 for milk, pay their $400 rent, and buy their $0.50 paper, they don't have any money left! They petition to raise minimum wage. Now Joe has to pay $15 per hour instead of $10. Joe does the math and realizes that now his delivery costs are $1200 instead of $800. This means that Joe only makes $800 a day instead of $1200. Joe is not happy, because just got a 30% pay cut, thanks to the rise in minimum wage.
Joe decides to raise the price of his papers to 75 cents to pay the costs. Bread goes up to $2, Milk to $4, and rent to $600. The ten men are right back in the same situation. They can barely afford the same stuff. In other words, inflation. If we refuse to allow Joe to raise his price, then he walks into work and calls the 10 delivery guys. He promptly fires guys 7, 8, 9, and 10. He then tells guys 1-6 they now have to deliver the 1300 papers instead of 800. If they refuse, he fires them and rehires one of the guys 7-10, because they'll do whatever they need to get a job. In other words, unemployment. The only way to stop this is to fix prices, raise wages, AND guarantee jobs. This is a total destruction of free enterprise. In the end, Joe will make his profit, and his delivery guys will not make enough money to make an easy living. What should have happened is that the delivery guys who wanted more money should have found a skill worth more money and gotten a better job.
You see, minimum wage never fixes the problem. People who make the bottom income bracket will never make enough to earn an easy living. The solution to making enough money to earn a good living is to work and make yourself worth more than the bottom income bracket. This sounds cruel, but it's really not. In a system of free enterprise, hard work is the ladder out of poverty. Free enterprise always gives you the opportunity to go out and make your own money however you see fit. If some guy is charging too much for something, go into business and make a cheaper one. If you can make a better product than someone else, go out and work to be the best in the market. Find a skill that companies will pay you for. The problem is not the evil big businesses. The problem is that some people would rather make a law than work harder than they think they should have to. America is full of rags to riches stories. The one thing you'll find they all have, is someone who went out and worked hard for it.
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