Let’s talk about the poverty situation in the U.S. Yep, lots of people are poor. People keep saying it’s because minimum wage is too low. “We need to raise the minimum wage to $15 an hour! Give people a living wage!” Or they say we need a Universal Income. While these ideas sound good on paper, they will actually make things worse. Way worse. Here’s why…
- If you raise the minimum wage, EVERYONE will need raises.
A common business has job tiers. Starting pay is $10 we’ll say, $15 for assistant manager and $20 for manager. If you raise the starting pay to $15, the assistant isn’t going to keep accepting $15, they will want $20. And the manager will not accept $20, he will want $25 or $30. On top of this, what most workers don’t know, is that the business must match the amount of taxes you pay on your paycheck. So that $10 worker is paying $3 to taxes per hour (roughly) and the business is also paying $3 to taxes for them per hour. Raise everyone’s pay like this and you really, really increase the costs for a business. This will cause layoffs because of ….2. Owners will not allow their income to shrink when raising the minimum wage.Let’s say you own a mom and pop and you bring in $100/hr. $10 + $3 goes to your cashier $15+$5 goes to your assistant manager and $20+$6 goes to your manager. That leaves you with $59 an hour to pay your rent, electricity, cost of goods, insurance, gas, water, sewer and take your profit. The owner of the business, who is taking all the risks, will not accept a $20 profit and make the same amount as the manager who is taking no risks, so the owner of the store takes $40 profit out of his $100 we’ll say. Now let’s give raises we stated above and all of a sudden his employee cost is now $85/hr if his manager demands $30/hr. His profit is gone. He doesn’t even have enough to pay his bills! So where is he going to get the money to pay them….3. All of this extra money to cover employee wages is pushed to the consumer in the form of raised costs for all goods and services – IE: inflation.So now the cost went up by 40% for the owner so, guess what? Your $10 hamburger will go up 40% to $14. And so on and so on and so on and now, while everyone is paid more, everything will cost more and you are in the same exact situation. And the owners of the rental properties will KNOW you just got a raise from $10/hr to $15/hr and will raise rents accordingly. And food prices will rise because the market is having to pay their employees so much more money as well. Nothing will change except everything will be more expensive and the poor will remain poor and those without jobs or with just part time jobs will have an even harder time paying for things.The true problem isn’t the wages, though that’s the story you are being given, it’s that people are staying at entry level, non-educated jobs and expecting them to be careers that pay career wages. Guess what? McDonalds, unless you are a manager, is not a career. Neither is Walmart or Disneyland or CVS or a Gas Station or anything else you can do with no education. These are jobs for high school kids. They are low paying for a reason. They are not $60,000 a year jobs. Just think, if a cashier at McDonalds made $60,000 a year, what would you make at your job that you went to college for 4 years or 8 years for? $100k? Do you see the snowball that occurs? Will you accept $60,000 at your job with your $60,000 in student loan debt when Jimmy the high school dropout makes that much typing in Big Mac orders at McDonalds? No fucking way.And things are only going to become worse. In my lifetime I see these things occurring:
- No more cashier jobs. Almost everything will go self checkout and you’ll have to pay with a credit card, no more cash. This stops stealing and allows companies to hire 1 or 2 uneducated employees rather than 10 to man cash registers. This is already happening at super markets and Target and McDonalds has even begun this. It’s coming sooner than you think. A lot of the fast food and coffee shops are even opening drive through only shops where they have one cashier to pay for.
- Manufacturing jobs in the United States will be 90% gone. This is a huge one because these jobs usually pay a lot. Most of these jobs will be done by robots or will be outsourced to other countries where it costs less to do them. These jobs can’t be relied on in the future.
- Gas station jobs. While the United States government right now has their heads up their asses and are trying to keep coal and gas alive, the rest of the world is leaving us in the dust going to solar and batteries and car manufacturers will follow that money. All cars will be electric sooner than later and you won’t even own a car.
- Car salesmen. Think of how many car salesmen are in your area. Hundreds. All uneducated jobs. All will disappear soon as self driving cars become standard. You won’t buy a car, you’ll hail a car when you need it and a random car will come and pick you up and take you where you need to go and then drop you off and go get the next person. Most major cities are now having a massive influx of bicycle and scooter sharing stations as well.
- Any job that needs a driver. Taxi’s, Ubers, Lyft’s, deliveries, UPS, FedEx, Mail, whatever, these are all in big trouble. Uber’s entire business plan is to survive until there are autonomous cars and then fire all the drivers and get rid of that cost and instantly become profitable. Amazon, the only thing keeping the USPS afloat, is working on drones to deliver your packages to your door. No people involved in that process.
- Parking lot attendants. If you don’t own a car, you don’t need to park it.
- Waitresses. Restaurants are already starting putting iPads on the table where you order what you want and then a server just brings it to you when it’s ready and you click when you need a drink refill. A huge restaurant could get by with a couple servers and no wait staff at all.
As you can see from this tiny sample off the top of my head, uneducated jobs are going to disappear from the United States for the most part. If you can’t see that coming, I’m worried for you. You MUST have a specialty in something and you are far better off if you choose a career that is hands on or you must do face to face. A computer programmer is a great position if you are lucky enough to get hired at one of the bigger companies, but for most people, outsourcing to Russia or India is SOOOO much cheaper than hiring an American. That’s insanely easy to outsource. A pharmacist, on the other hand, isn’t so easy to outsource. Or a scientist. A doctor. A financial expert. A mechanic. A plumber. A contractor. An electrician. All these jobs take skill, are hands on and need to be done in person.The state of California alone has raised the minimum wage 17 times since 1978 and it hasn’t made a single fuck of difference in the state as far as poverty is concerned, but it has completely run the cost of goods into crazy costs.Quickly, let’s look at the ‘bad guys’, the CEOs making millions of dollars and not passing along the money to their uneducated workers. This is a horrible way to look at this. Risk = Reward. That is capitalism. If you aren’t willing to risk what you have, you will not be paid highly. These CEO’s are risking their entire business and all of the jobs within it with the decisions they are forced to make on a daily basis. When Disney decides to spend $1 billion dollars to make Star Wars land, that is an incredible decision to make. That’s more pressure than you will ever fathom. If they are successful, the CEO will make a lot of money. If it fails, he will lose his job and lots and lots of people will also lose their jobs. People who take risks in starting businesses deserve to make the lions share of profits.So, the answer to the question of how do we get people out of poverty isn’t to raise their wages or to punish the people who take all the risk in an attempt to make a profit, it is to educate people. Make college free. Make trade schools free. Educate people on how to deal with their money properly.When you get a raise you don’t buy a fucking boat, you save it. You invest it. The rich get richer due to compounding interest and if the middle class would plow their money into investments instead of big screen tv’s and motorhomes, they would end up millionaires quite easily. If they realized they are getting screwed by being told to pay off their homes, they’d be millionaires quite easily. The American people have been tricked into thinking ‘stuff’ is what you want, but the true secret is ‘cash’ is what you want and that cash compounds and that compounding is the answer to poverty.Until we teach the American people that uneducated jobs are not careers and we give them a way out of these ‘any monkey can do it’ jobs and into real careers that increase their income and they learn what to do with their money when the income increases, we will stay where we are.Invest in peace…