As 13 states plan to increase their minimum wage in 2014, I thought it would be a good time to debunk five of the most common minimum wage increase arguments that your Liberal friends are likely to throw at you this year:
Myth #1: “Tons of families are affected by raising the minimum wage”
Fact: Only 1% of hourly-wage workers in America are married people making minimum wage
Myth #2: “Most min. wage workers are working two jobs, tons of hours, and can’t make ends meet”
Fact: Only 2.6% of minimum wage workers are working over 40 hours/week
Myth #3: “Young workers make up a tiny part of total minimum wage workers”
Fact: People under the age of 24 make up over 50% of all minimum wage workers
Myth #4: “Minorities are hurt more by low minimum wages than white people”
Fact: White people make up 79% of hourly-rate employees, and 78% of min. wage employees
Myth #5: “Over 3 million people make the minimum wage”
Fact*: Only 1.6 million people actually make minimum wage, the rest make tips on top of their wage, but are included in the min. wage numbers that Liberals love to quote
*Author’s Note: I used the 3.5M figure for all previous stats, so that you could still make apples to apples arguments with your Liberal Friends
- Ron Paul: Raising Minimum Wages Appeals to Those Who Do Not Understand Economics (economicpolicyjournal.com)
- 13 states raising minimum wage Jan. 1; Oklahoma is not one of them (kfor.com)
- Ring in the new year with higher wages (msnbc.com)
- Democrats Turn to Minimum Wage as 2014 Strategy (nytimes.com)
This is a fantastic question!
There are many steps that could be used to bolster innovation in this country. Take, for example, the cash for clunkers and cash for appliances programs that the government put in place over the last few years. In the cash for appliances program, the $300 million in incentives lead to billions and billions of dollars in spending (e.g. $100 promo on a $999 refrigerator – The $100 that the US spent led to almost $1,000 in actual spending by consumers, or a 10 to 1 return). Compare that to the $300 checks the US gave out several years ago, which at best provided a 1:1 return, but we all know that didn’t happen because some people saved the money instead of spent it. Long story short, find a way to replicate the cash for appliances idea in a way to bolster innovation spending which isn’t already occuring. For example, could the US offer a $10 million dollar incentive to any new venture capitalist start-up that funds over $100 million in VC funds/year? This drastically reduces the risk level of the VC firm, but provides over $100 million in start-up spending (more than that, since the VC firm is unlikely to stop directly at $100 million in spending). Could the US go a step further and offer this to large companies who start a wing of their company to do VC investing in their industry? For example, would GE spend another $100 million in VC spending across their various industries if the US was going to give them $10 million and let them keep the profits from the VC wing of the company? Companies, like GE, have shown that they will do anything possible to take advantage of tax credits or government incentives. This seems like an idea that could bolster small-business investment all around the country in nearly every industry.
Other possibilities would be to provide tax credits to individuals who start businesses and spend $x amount of money. For instance, we gave people $8,000 to buy a home last year and people went crazy over it. What if we gave everyone a chance to get $8,000 in tax credits if they invest $50,000 into starting a new business? That would be an instant 16% return on the business-owner’s money. This type of incentive could cause someone who had been on the fence about starting the business to decide to take the leap. It would also stop us from spending money on extremely small businesses and focus more on businesses that were more likely to have employees.
One last idea, on the vein of how to create a more entrepeneurial culture, would be to alter the tax structure on VC-oriented investments. For example, right now you pay capital gains on long-term investments in established companies. What if that was replaced by a 5% tax on any investment that met certain criteria? A mutual fund that invested 80% of its holdings into VC firms, for example. This would cause many of the millionaires in this country to allocate the more aggressive portions of their portfolios towards these types of investments and would instantly increase the amount of dollars that VC companies would have to spend, which inherently would raise the number of small business owners in this country.
Anyway, I am not in government, so what do I know. Good Luck out there everyone!
Please follow this conversation on quora.com: http://www.quora.com/How-can-a-country-go-about-creating-a-more-entrepreneurial-culture/answer/Todd-Hagopian