Comment 28358

By A Smith (anonymous) | Posted January 29, 2009 at 22:45:01

Grassroots, Walmart earned 3.14 billion in profit last quarter. However, in order to earn this, it needed to sell 98.5 billion. Therefore, for every dollar in sales, it kept about 3 cents. Therefore, if Walmart was forced to pay it workers more, the only option Walmart would have, other than losing money, would be to either lay off workers and install more automation, or hike prices for consumers. However, since most people that shop at Walmart are on the lower income scale, doing this would just mean that poor people would have to buy less goods. As you can see, just because government tells businesses they must be nicer to their workers, doesn't mean that they can create real wealth out of thin air.

If you really want to help poor people, you need to increase the amount of goods and services that the economy produces. For example, if you started up a company tomorrow that could produce cars with only a single worker per plant, this would free up other workers to produce other goods and services. As a result, each dollar of wages would now be worth more, since the growth in output would have risen faster than the money supply.

Simply telling employers what the minimum acceptable wage should be, does nothing to increase the wealth that businesses create and therefore can do nothing to help the average person. Companies simply will not pay people more than they are worth, so by forcing firms to have a minimum wage, the government is forcing those with few skills to stay unemployed.

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