I have to get this off my chest.

I am writing this when I should be doing homework. I am writing this because I am tired of the repeated ideological arguments over minimum wage/taxes and small businesses. I am tired because if people would just THINK it would change…well…everything.

I’m going to describe a scenario. The numbers are simplified for clarity. They ARE NOT intended to be an accurate model.

You own a cupcake shop. Every day you sell around 275 to 285 cupcakes. You have three employees who enable you to bake around 300 cupcakes a day and serve customers, etc. Rarely do you sell out of cupcakes and need to bake more. You get a tax break roughly equivalent to the pay of an additional worker. Do you hire a new worker? No, of course not. You have enough staff to more than meet you customers’ needs. To hire makes zero business sense. You pocket that money.Thank you, Uncle Sam.

Another option. That same amount of money is now dispersed into the pockets of 50 or so low-income families in your area. Now that Mom who passes every afternoon as she walks her child home from school has a little more cash in her pocket. And when her child with begging eyes asks for a cupcake she is ABLE to say yes.

Now you have more customers. Your employees have to work overtime to meet demand. What do you do? You hire a new employee.  You MUST, otherwise you’re throwing money away on overtime.

So how does that Mom get more cash? Well, one way is to raise the minimum wage.

I can hear the cries now: “But small businesses will have to cut jobs”. No. See, hiring is not determined by how much you pay your employees. It’s determined by how many employees you need to get the job done. Employers pay the least amount necessary to get a competent employee and hire only the number of employees they need.

Not because they’re evil,or greedy, but because that’s the only thing that makes business sense. That is why history shows raising the minimum wage does NOT cause a rise in unemployment. Because taxes/wages have NEXT TO NOTHING to do with hiring. Furthermore, demand HAS EVERYTHING to do with hiring. More cash in a wageworker’s pockets raises demand which increases hiring which…

So you get the point, right?

If someone tells you a lower min wage and or lower taxes drive hiring, then one of two things are happening. A) They are lying. B) they think business owners are morons. Take your pick.

I feel better.