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Wage War

Tipping scaleRight now as I type, there is a movement to push wages to $15/hr. This is economically dangerous and if successful will only cause more joblessness and inflation. Raising the minimum wage only closes the gap between bottom wages and middle class wages. That gap is what middle class workers have worked their butts off to earn. As that gap is whittled away, those entering the marketplace continue to think they are getting better as wages increase, until the prices of everything go up. It’s an endless cycle of inflation. Price for labor and price for goods are connected. Labor price can’t increase with out affecting the price of goods and services to the consumer.

So I always come back to that question of why? Why would unions support wage increases for minimum wage workers? Well, below is an excerpt from the US Department of Labor.

How are prevailing wage rates established?

The minimum monetary wages and fringe benefits to be paid are established based on what is prevailing in the locality. A rate is determined to prevail where a single rate is paid to a majority (50 percent or more) of the workers in the same class in a particular locality. If a single rate is not paid to the majority of workers in a locality, statistical measurements such as the median (a point in a distribution where 50 percent of the surveyed workers receive that or a higher rate and 50 percent receive a lesser rate) or the mean (average) are used to establish prevailing wage rates.

So, unions are using median wage to negotiate contracts. The only thing they can do to increase median wage is increase minimum wages. Unions know that minimum wage worker ends up in the same place regardless. However, the union workers get a bump in their contract which is substantially higher than minimum. The union doesn’t care about low wage earners.

The union is merely tipping the scales in their favor. Meanwhile all non-union labor gets screwed out of jobs and wages. Joblessness increases for both union and non-union workers. The ability to enter the marketplace is the ultimate freedom that America is built upon. The ability to enter the marketplace, in fact the very fabric that is the American dream is torn to shreds.

References:

http://www.dol.gov/whd/regs/compliance/web/SCA_FAQ.htm#wagerates

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