Kurt, of course, is disappointed that the State of Minnesota is poised to modernize its deficient minimum wage laws, but he certainly doesn’t show any valid reason why. He told Malmberg that the minimum wage actually hurts low income people, he described it as a regressive tax on the poor! Now this is typical of the bizarre way Republicans see and justify their corrupt view of the world, a world where up is down and night is day.
Zellers tried to explain how a minimum wage is a “regressive tax.” Here’s how it works. The price of Big Macs and Tacos will go up a dollar. That’s right, the price of fast food — presumably the food of the poor — will go up and thereby “tax” the poor. One has to presume that the poor would be better off if we left them scratching a subsistence living with the assistance of dollar menus. It doesn’t occur to Kurt Zellers that perhaps people would like to buy groceries. Maybe?
So let’s see if we can think like Kurt, we’ll try regardless of how much it might hurt. You raise a worker’s wage and the cost of a burger is going up a dollar. He’s making a simple correlation between costs and prices that don’t work in the real world.
Minnesota’s increase is significant, almost $2 in the first round of increases to bring the minimum for one of the country’s lowest at $6.15 to $9.50 in 2016. But we really don’t know what the increase will do to prices. Labor is only one cost.
Kurt seems to like McDonald’s, so let’s use McDonald’s, the company that serves billions and billions, as an example and see if we can make sense of Kurt’s argument. (People smarter than me have tried this using a much higher wage, but that’s ok…let’s try to reason through it with Minnesota’s numbers.)
According to Forbes, a single McDonald’s restaurant, on average, takes in just over $8000 in gross receipts each day. Now let’s say the average price of all single items at McDonald’s is $3, which I think is probably a little high, but a higher number helps Kurt’s argument. If the price of items increases by a dollar, that is a 33% increase. If you realized that increase and maintained sales volume, the gross receipts go up by $2700 daily. The average McDonald’s has 60 FTE employees. A $2 increase would add about $940 to daily payrolls. Zellers’s dollar increase is almost three times above the costs of the raise.
But this is a fool’s folly anyway. Some products — pop, french fries, coffee — have higher profit margins than a Big Mac. The art of making a profit involves more than just pricing a la carte products.
And I understand that Zellers will come back and argue that sales would go down if prices went up and I’m sure he’s right. But I’m also just as sure that Zellers’s numbers are complete nonsense spoken by a guy clearly not qualified to comment on the issue.
Zellers went on to whine about job loss, the pathetic whimper of a man without ideas. Anything you might do to improve jobs and the economy in Minnesota will send jobs across state lines, you know. He talked about college kids losing jobs in Moorhead because the jobs would go to Fargo. If that were true — if all of the fast food joints shut down and moved to Fargo — wouldn’t the kids follow the jobs?
The whole job migration argument is largely a proven shame More troubling is Zellers’s limited view of the minimum wage worker. Making the Fargo argument is nothing less than a complete misunderstanding of Minnesota’s workforce today. Minimum wage jobs are not the reserved for entry level young part-time employees alone. Very much the opposite. Today you’re as likely to see someone entering his golden years working for minimum wages as you are to see his grandson doing so. Many families struggle to make ends meet working multiple minimum wage jobs.
It is a disgrace that a state legislator is so poorly informed and blind to the economic realities of many thousands of people he is elected to serve.
In the end wages are a cost like any other. It will have some impact on employment and profits, especially in the short-run, that could show some negative outcomes. No one can disagree with that, but in the long run these changes should move more money in the economy which will help the overall economy. That benefits everyone, rich and poor alike.
There’s a reason why Republicans have failed the economy in recent decades. Their positions are not practical and reasoned, but are instead based on a destructive anti-government ideology that has little relation to fact. We have to stop giving people like Kurt Zellers leadership positions and that won’t happen until voters wake up and elect better people to office.