The case against the minimum wage is easy to make when it comes to small businesses. Many are just scraping by, and common sense tells us that minimum wage hikes can substantially cut into their ability to operate profitably.
But what about those companies bringing in billions? Liberals certainly are rhetorically strong when they tell the story of billion-dollar companies paying low wages. Surely THEY of all people can afford it, right?
Such reasoning is an appeal to ignorance of the average person’s understanding of business. The average American thinks the average business has a 36 percent profit margin – which is 5.5 times higher than what it actually is (6.5 percent).
WalMart’s profit margin is less than half of what the average businesses is – a measly 3.1%.
So no, when a company is pocketing only three cents on the dollar, a hike in the minimum wage will cause a substantial disruption in the way they operate. The latest evidence to prove this comes out of Los Angeles.
As Breitbart reported:
Los Angeles residents of impoverished Chinatown were shocked to learn on January 17 that the Walmart they pleaded for years to get would be shut down at 7 p.m. Sunday evening due to the city’s new $15 minimum wage ordinance, and union harassment.
Crowds flocked to the store for lower food costs, substantially cheaper pharmaceuticals, and even ethnic offerings. But labor leaders immediately started protesting against the store for refusing to unionize, even though 100 Walmart employees refused to sign union cards.
According to Movement organizer Brooke Anderson, “As people deeply committed to environmental and climate justice, we condemn Walmart as a climate criminal and we stand side-by-side with Walmart’s workers organizing for $15 per hour, full time work, and the respect they deserve.”
During last summer’s union-led “Fight For 15” minimum wage movement in Los Angeles, Walmart was demonized on giant banners proclaiming, “Walmart Wages War on Workers” and “Walmart Wages War on Planet Earth.”
But after succeeding in pushing through a minimum wage that was set to start on January 1 at $10 an hour and jump in steps to $15 in 2018, unions and liberals have begun to panic that spiking wages might actually cause the 15 percent rate of unemployment among those with a high school diploma or less to rise.
The non-partisan Congressional Budget Office’s most recent in-depth analysis on minimum wage hikes estimated that President Obama’s proposed federal minimum wage increase from $7.25 to $10 an hour would raise wages for 16 to 24 million people, but would also kill 500,000 existing jobs.
Breitbart News reported in late July that local union bosses want their locals exempted from the law, since businesses were already making plans to cut employee head count.
It didn’t even take a $15 minimum wage to kill Los Angeles’ Walmart – it just took the fact that it was going to happen in the future. That fact alone should confirm the minimum wage truly does kill jobs, and it’s not as affordable as populists on the left would like us to think.