15 minimum wage hurts the very people it's supposed to help. In this episode,
I'm going to explain why Biden's 15-dollar minimum wage is myopic. What does that mean?
It's extremely short-sighted. And I'm going to explain why.
I'm Doug Andrew and I've been a financial strategist, a retirement planning specialist
for more than 4 and a half decades. I've been very blessed in my career to have
authored 11 best-selling books. I'm working on my 12th one right now. But I'm very concerned
because as I study economics and help people prepare for their retirement and save money
so that they do not outlive their money but also use financial vehicles that make yourself immune
from taxes inflation and market volatility.But a lot of times, politicians do not understand the
negative impact of some of their tax policy. Now, it seems like raising the minimum wage would be a
nice thing to do, right? Well, first of all, if you do a blanket increase of minimum wage across
the country, there are so many different costs of living throughout America that you're not helping
everybody equally. For example, in New York or San Francisco, the cost of living is through the roof.
Do you know a 5-bedroom home in San Francisco, Palo Alto area rents for about $12,000 a month?
Whereas a newer, nicer 5-bedroom home in Memphis, Tennessee rents for 2500 to 3,000 a month.
You have a lot of other costs like the food and so forth. And so, a 15-dollar minimum wage might be
good for people that have higher cost of living in the coastal cities. But you talk about the midwest
and even like Memphis, Tennessee; those people do not need to have the same amount. And so,
what sounds good on the surface is actually not needed. In fact, it will cause
unemployment. And a lot of politicians do not understand this. So, let's look at a small
business owner in the midwest. This business owner let's say has the ability to pay $100 for
every hour for his workers that want just to have some work and their cost of living is very low.
And so, that boss is able to pay let's say $10 an hour as a starting wage for these people.
As soon as you raise that minimum wage to $15 an hour, what did you force that employer to do?
Come up with more money magically? No. Most businesses only operate on about a 3% profit
margin. So, that means if that employer has to pay $15. He now can only afford seven employees at the
most. In fact, he's going to have to tighten his belt to be able to do that. 7 employees at $15 is
$105. And so he has to increase his outlay $5 an hour for his small business. So, he has to lay off
or let go of 3 employees. So, is this helping? No. Now, 3 employees have lost their jobs.
What else does the employer have to do? In order to meet that higher wage, they have to increase
the cost of their goods and services. So, all of a sudden, you get a raise to a
$15 an hour but that extra raise ends up going out the window with higher costs for food
and gas and everything else. All of the goods and services that are being supplied
because you forced the employer to raise prices. So, you got more money but it bought less.
And so, you're right back where you started from. A lot of times, it's so simple with
economics but unfortunately a lot of politicians do not understand the economic impact. You
should leave this up to the states in my opinion based upon the economies in the various states.
Let me share with you a couple of other insights a lot of people don't think about.
Now, if this is intriguing you and you can think of somebody who ought to be watching this episode,
be sure and share, like, subscribe to the channel. I release an in-depth answer to a
financial question almost on a daily basis on this channel. And at the end, I'm going to show you how
you can obtain a free copy of my most recent bestselling book. It's called The Laser Fund.
Now, when we just do a blanket increase to $15 an hour, the government has estimated
by doing that in one stroke of the pen, 1.4 million jobs will be lost in America like that.
In fact, just in the anticipation during Joe Biden's candidacy when he said "I am going to
raise the minimum wage to $15 an hour", many employers across America began to make plans
to cut costs, let people go and switch to automation. Look, people are already
preparing because they know they can't afford to do that for a lot of the labor that they need.
And so, we will see as a result a recession. We will see unemployment go up dramatically,
a big spike in unemployment. We'll see goods and services go up in a recession.
Recessionary time, you'll see goods and services go up. Inflation. And this is what happens when
with a stroke of a pen, think, "Oh! Look how good I am. I'm going to raise the minimum wage across
the board to $15 an hour." You can gently begin to raise people's minimum wage based
upon the cost of living in their area. That makes sense. But I'm really concerned about
what this is going to do. It's myopic. Now, what does myopic mean? Short-sighted. In other words,
a lot of times we pass tax policy. Or a piece of legislation like a minimum wage going up to $15
an hour. And we think, "Oh, golly. Everybody's going to love us for doing this. It's going to
help out so much." That's short-sighted. What is the farsighted vision of that? Recession,
inflation, unemployment, 1.4 million jobs down the drain. See, that's what's going to be the
long-term effect. But at the end of the day, anytime you just raise the minimum wage within
months or within a year or 2 at the longest, it didn't do any good
because the increase in income was gobbled up with the increase in cost because of the
inflation that resulted because employers are now forced to charge more for their goods and services
to be able to afford paying a higher wage. Does that make sense? It's really basic economics. So,
I get really concerned and this is about you and your brighter future. If you can help
spread the word to help people understand that sometimes when we just want to do something, "Oh,
let's help everybody out and raise the minimum wage." It's really myopic. It's short-sighted.
We're only thinking about the immediate effect not the long-term consequences of an action like that.
And frankly, this is what causes so many times the goods and services and inflation to get out of
control. We have economic stimulus packages that have been passed. And so, I'm concerned because
the government is spending money that they do not have. And this is going to cause the inflation
and the taxes. It's what I call the tax and inflation power curve. So, we need to rethink
our thinking. If you want to learn how you can take ownership of your brighter future, how you
can do far better, and empower those that you employ (if you're an employer). But if you want
to learn how to be able to accumulate your money on a safe basis totally tax-free, I would love for
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