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Why the American Economy Would Be Improved If Minimum Wage Was Reduced to $2.00 per Hour

Updated on October 31, 2018

It All Boils Down to Greed

People want more money, and certainly I can't fault them for wanting to have the things that can make their lives better. The problem is that most people don't understand that they could be living better for less and not only be helping themselves, but also helping the American economy at the same time.

Before the industrial revolution, frugality was the order of the day for most families. Generally women didn't work outside of the house, people had many more children than they do today, and people made more things than they bought. 90% of America was self-employed back then and the "American Dream" was alive and well and thriving. The cost of living was low and so was the amount of money that people earned. In 1902 my great-grandfather built the house my grandmother grew up in for $1500.00. They made their own bread and their own clothes. My grandmother's brother owned a cattle farm, and they got their meat, milk, butter, and cheese from him. Everything was great until the 1920's. That was the beginning of the industrial revolution and when everything started to go to Hell-in-a-handbasket.

Driving Forces Behind Economic Recession

It's a simple fact that one of the driving forces behind economic recession is rising prices, but one needs to understand why prices are rising, and how lowering the federal minimum wage can help stablize the economy. Prices essentially rise for two reasons.

  1. Rising costs of raw materials.
  2. Rising costs of labor.

These two are forever tied to each other, because the reason that raw materials costs rise is because of the rising cost of labor to produce them. This, in turn, causes the price of finished products to rise, and because the places that sell these finished goods have to pay more to purchase them, rather than give employees annual raises, they would be better served by giving their employees annual pay cuts.

Since federal minimum wage standards are a law, it is impossible for employers to legally give their employees pay cuts, which means they have to raise prices to the consumer even more to cover thd additional overhead costs to maintain their business. Consequently, we are caught in a never ending spiral of rising costs, which drive rising wages, which cause even higher costs, and are the driving forces behind economic recession.

Why Raising the Federal Minimum Wage is a Terrible Idea

King Ribbon Company, East Stroudsburg

In the early 1920's my grandfather decided to leave the ranks of the poor and he opened his own business with a few partners, called the King Ribbon Company. Nowadays, if you did your market research, you'd probably find that the market of ribbon is pretty limited.

Do You Think the Federal Minimum Wage Should be Lowered or Raised

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Lower Federal Minimum Wages Means Lower Prices

If raising the federal minimum wage has caused prices to increase, then it seems that lowering it would have exactly the opposite effect. The key is to give people more buying power, so there has to be a balance of power. Prices must go down by a larger percentage than wages go down, so the average American will be able to buy more with the dollars that they have. Take gasoline for example (Please take all of it, and replace it with hydrogen fuel cells). When gasoline prices start going out of sight, people travel less, thus spending less money on lodging, souveniers, food, tolls, and all the other things that go along with taking a trip. If people aren't spending money on tolls, the roadways go into a state of disrepair, not only causing inconveniences, but sometimes danger also.

Because people aren't going to resort locations, those people who are employed by those resorts may suffer layoffs, decreased earnings from a loss of tips, and a myriad of other economic nixes and nay-nays. Breweries and wineries suffer because the resorts don't buy as much of their libations. Cattle ranchers, farmers, and fisherman suffer because the resorts aren't buying as much beef, dairy, and fish to feed their visitors who are no longer coming. The cattle suffer because why fatten up beef cattle that you can't sell or feed a dairy cow copious amounts of grass (for eating, not smoking) so she'll produce more milk. I'm not really sure how the fish suffer, other than they might have to listen to more of Charlie the Tuna's onerous monotonous monologues.

No matter how you slice it, everybody suffers when prices go up and everybody benefits when prices go down. The only way prices go down, is if wages go down, and the only way that will happen is if the federal govenment reduces the federal minimum wage. It would also be beneficial if we streamlined out government and required all government officials to work for minimum wage, including the President of the United States.


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