Posted Jan 28, 2014 by Martin Armstrong
The entire issue of raising the minimum wage is so distorted and the press just jumps all over it and plays it like the rich v the poor. Obama will announce that he will sign an executive order increasing the minimum wage from $7.25 to $10.10 for new federal contracts. But what people fail to grasp is the minimum wage applies to really unskilled labor and was the entry point for kids getting part-time jobs.
The minimum wage is not the issue. What Obama is not talking about is how the Federal Government has been laying people off in the military to avoid pensions and even the Post Office is hiring part-time to avoid having to pay pensions. The minimum wage is not the typical wage earned by people supporting families.
So what is the REAL message? Raise the minimum wage but eliminate benefits & pensions? That seems to be the real direction we are headed into. Obama is doing this by Executive Order because he lacks the support even in his own party. If this were applied in the private sector, you are looking at a near 40% increase in wages. This filters through to a 40% rise in costs and you cannot simply help people earn more without it also costing consumers more. Who else will get a 40% wage increase in one year?
It would seem to be that we need real reform. Stop holding back people’s tax refund checks and stop borrowing from the average person without paying interest. That is what payroll tax is doing. We borrow from the poor, pay them no interest, and then pay interest to the bankers for not lending money 0.25% on “EXCESS RESERVES”.
If we eliminate payroll taxes, the standard of living would rise and young people just might be able to get married and start families again. But about 60% of college graduates cannot find employment in their field and are doing service jobs to get by while hounded for student loans. They begin their imaginary careers loaded up with debt that prevents them from getting ahead.
There are serious reforms that need to be looked at. Installing a 40% increase in minimum wages for government employees that will cost more taxes is not the way to move forward.