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posted: 3/3/2014 5:01 AM

Higher minimum wage will lead to job losses

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David Borris' Feb. 22 letter in support of raising the minimum wage to $10 an hour ironically did more to oppose it than support it. In addition, his facts were incomplete. Two of the three companies he has mentioned, Sears and Dominick's, are either out of business or on life support. Dominick's was a union operation and had wages above $10 an hour. If employers pay more, they either must raise prices, reduce workers or both.

If prices go up, there is less disposable income for other things. These issues have no impact on real GDP growth, only where the money is spent, and ultimately is inflationary.

Borris' story about Henry Ford was right on, except he omitted one fact. He raised wages above what President Roosevelt had passed as the first minimum wage to attract the best people and Roosevelt took him to court. Ford won the decision and re-established the fundamental principle, "let the market establish the price of labor, not government."

As for the free business promo, I ask these questions: If his employees make $10 an hour and if the law is passed, will he raise everyone's pay by $3 an hour? It would be the "fair" thing to do. If he raises their pay, will he raise all his catering prices or reduce workers? His comment that good employers pay more to get best workers disproves his own point. Then why is there a minimum wage at all? Or if it doesn't matter, why not raise to $20 an hour?

There is a certain outcome when government dictates wages. Jobs are lost. This is particularly true in manufacturing. When wages, benefits, and health care are all dictated by the government there is a clear result: a European economy. That hasn't worked out so well.

Richard Francke


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