In episode No. 5 of the Ericka Redic Show, the host interviews Shawn Shouldice to learn how the pandemic and government regulation have combined to hurt small business in Vermont — and what can be done to make survival more likely.
Image courtesy of The Ericka Redic Show
Economics 101: Minimum wage boosting advocates ignore its ripple effect.
If the minimum wage increases from $11 per hour to $15 per hour, those already earning that amount (because they’re more productive than the typical minimum wage earner) will demand a commensurate raise in pay. And when those already earning $15 per hour receive, for example, only half the commensurate wage increase, to let’s say, $17 per hour, those workers already earning $17 per hour will – you guessed it – demand their commensurate wage increase. So, you see where this is heading.
Even when subsequent wage increases, for those already earning more than $15 per hour, is only 10% of the percentage of this proposed raising of the minimum wage, the overall impact on the economy is exponential. And if anyone takes the time to do a simple spreadsheet modeling of this circumstance, it is more than evident that, in actual dollars, the net effect of the minimum wage increase, over time, actually decreases the earning power for that very group of people its intended to benefit.
This is one of the reasons Vermont’s poverty rate is increasing faster than, for example, New Hampshire’s.
The other reasons raising the minimum wage is detrimental, of course, are that it has the immediate effect of limiting jobs, AND increasing demand on social services such as low-income free lunches, welfare, food stamp and rent subsidy costs.
Arbitrarily throwing money at a problem, as opposed to letting free markets determine the supply demand curve of goods and services, always leads to these distortions that worsen economic vibrancy. And those who disagree are typically the same people who are skimming (i.e. redistributing) a portion of this funny money for their own purposes.
The government, for example, is the primary benefactor of wage increases over the short term, with increased income and sales tax revenues – at least until the markets adjust – when the government again, inevitably, promotes yet another round of minimum wage increases because wage polarity continues to get worse.
After all, if you run a spreadsheet model of this circumstance, it becomes clear that the best way to help low-income workers is to ‘lower’ everyone’s pay by a commensurate percentage. High income earners will have a larger real dollar wage decrease than low-income earners, thereby decreasing the wage polarity. But doing so is politically suicidal, as it should be.
More importantly, the models clearly show that the best way to adjust wages is to let the free market do its thing.
And this is the explanation on why, with Vermont having had one of the highest minimum wage in the nation and the world, we can’t afford anything.
Regulation further burdens and builds expense into housing and voila, nobody in Vermont can afford to own their own home. Yet if you drive across our nation you’ll find many people living in great little homes living the American Dream that seems so elusive on Vermont.
Certain small businesses are doing very well here in Vermont. especially in Montpelier and in Burlington and a few other places. Now some are really hurting and some have already closed for good… Now the ones who are doing good are good friends with the legislation elites. The ones who aren’t doing good or have closed their business aren’t getting any help. Excuses they were given was ” The money is all gone” ” you didn’t send in the paper works soon enough” “your business doesn’t qualify ” BUT yet the legislation has money to buy electric cars, buses, and bicycles..and they want to the government to give them money to fix our roads. Now if the legislation and the governor did the work the way they are supposed to instead of spending money on stupid things or their pet projects there would be money in the coffers to do the right thing for Vermont.. Like I always said… “TAKE BACK VERMONT”
Can small business catch a break in Vermont?
Only if you are part of the crony capitalism in Montpelier, if that’s the case it’s Schaffer City. Crony capitalism is the first cousin to socialism, that’s why they get along so well.
Well done, very good camera presence, an upbeat delivery of bad news, it’s a good thing, a “happy warrior”. Keep up the great work.
The NFIB and out state should not be making anybody liable for catching the flu in their business. Covid 19 is a flu. You can not hold people responsible for getting sick or for being sick. This is a very, very terrible thing to even consider. The flu kills people every single year. Why would we EVER suggest a business is liable for any reason in spreading the flu. This would be a back door way to control and everything a business does and the liability is outrageous and medical malpractice.
Please, please don’t given them any more bad ideas, They come up with enough of them on their own.
Great video….