No Lunch!

This Forbes item says “As I Predicted, Seattle’s Minimum Wage Rise Is Reducing Employment” and says that yes, Seattle businesses have not shut down BUT other effects are happening due to minimum wage increases.

It describes my feeling that many people do not look at all aspects of a problem, rather they just hear a good talking point and go with it.

In a simple example, there is an electronics equation I=E/R which means the current in a circuit equals the voltage divided by the resistance. If the current (the left side of the equation) goes up, then either the voltage increased of the resistance decreased. If you increase the resistance without a change in the voltage, the current will decrease.

What the Forbes article says is that by raising the minimum wage, yes the businesses are still viable, BUT they are not employing as many people, or they have cut back on hours. Actions have consequences (reactions).

It reminds me of people who think this is a thing called “Free Shipping”. I cannot find a single company who will carry goods across the country for free, let along across the street. There is a cost for most everything. Free Shipping is nothing more than eliminating a line item on an invoice and shifting the cost elsewhere. Those infomercials do it. They offer an item AND free shipping, but if you act now, they will include another item for pennies if you pay shipping and handling. The shipping and handling charge is the recovery of the discount on the second item. If they can ship the first item for free, why can’t the second one go in the same free box? It can’t because there is (ready for it?) NO FREE SHIPPING.

So if wages go up, hours or number of workers goes down or prices go up. Why doesn’t profit go down? Seems you don’t own a business do you? Large companies owe it to stockholders, small Mom and Pop business owe it to their families to stay in business and pay the bills.

TINSTAAFL. “There is no such thing as a free lunch”.