Raising the Minimum Wage: a Definite Win-Win

In spite of all its various attempts to revive the economy, the Establishment must soon realize that it is in a catch-22 situation, insofar as:

• On the one hand, the Canadian marketplace is severely handicapped by the extremely limited purchasing power meted out to the ever-increasing number of near and below poverty line wage recipients, and doled out to the unemployed and underemployed masses.
• On the other hand, governments cannot balance their own budgets, due to this country's rapidly shrinking tax base while simultaneously increasing need for all types of welfare services. One might also add that Finance Ministers – presumably looking for solutions to deal with the problem – appear to favor cutting vital services as opposed to finding ways to increase their respective revenues.

Since the socio-econo-fiscal and political establishment has demonstrated that it is no longer willing to listen to the sound judgment and proposals of the few and far between, out-of-the-box thinkers and problem solvers – clearly the only remaining potential source of scientifically proven solutions – now it's up to the public to decide what the future will hold. Will it be the acceptance of the status quo, represented by belt-tightening and increased sacrifices; or will it be an honest effort made through a series of non-dogmatic programs to rescue this province and country from the current impasse or implosion?

In view of the previously described depressive state of the economy, the government of Ontario, after a few years of hiatus, recently decided to increase the minimum wage from $10.25 per hour to $11 per hour, to the chagrin of opponents who consider this change as a blatant interference with the 'delicate' mechanism of the "free market" system.

Somehow, the proponents – in the course of demanding the reinstatement of the "minimum wage" legislation – were unaware of an important precedent. Namely, that a century ago, Henry Ford made an important discovery: the economy is not a "zero-sum game". He decided to raise his workers' minimum wage from a dollar a day to five dollars a day. The automaker's valiant act enabled his workers to accumulate enough cash to pay for a $650 "Model T" motorcar within a few months. And, they could even afford to own a home in just a matter of a few years.

Incidentally, Ford's decision was mostly based on his realization that every employee has two parallel social-economic functions. Each employee was not only a worker but also a consumer. Apparently, he understood that income and consumption go hand-in-hand, i.e. low-wage earners are always shut out of the marketplace.

Evidently, leading North American economists and their disciples seem to have been either unaware of this "basic law" of economics, or have decided to ignore it – for clearly political reasons.

Ardent defenders of the status quo argue that there is no textbook formula for establishing a minimum wage. Others suggest that there are no written, set principles for executive remuneration either. Amazingly, many corporations have been quite inventive through the years in finding ways to 'negotiate' astronomical salaries, bonuses and severance payments, even for their failing 'top' executives.

Be that as it may, by developing a few computer models, field experts should be able to recognize that raising the minimum wage from the current rate ($10.25 per hour in Ontario)  to 20%, 30%, or even more to achieve a reasonable living wage would produce highly beneficial results all around. Additionally, this could potentially restart the stagnant economy, as demonstrated by the example below:

THE Y3Z COMPANY

Consolidated Statement of Income

Product and Services Sold		$1,000,000	$1,011,210	$1,015,925
	Rate of Wage Increase	Current Rate	20%	30%
	Minimum Wage	$10.25/hr.	$12.30/hr.	$13.32/hr.
Cost of Operation
	Products Purchased	$600,000	$600,000	$600,000
	Rent	100,000	100,000	100,000
	Utilities	15,000	15,000	15,000
	Services	30,000	30,000	30,000
	Vehicle	35,000	35,000	35,000
Cost of Employment
	Wages
	Employee 1	$40,000	$40,800	$42,000
	Employee 2	30,000	30,600	31,500
	Employee 3	20,000	24,000	26,000
	Payroll Costs	13,500	14,310	14,925
	Miscellaneous Costs	$16,500	$16,500	$16,500
Total Costs		$900,000	$906,210	$910,925
Income		$100,000	$105,000	$105,000
Required rate to compensate for raising the minimum wage, either by increasing the volume of sales, or by raising prices		N/A	1.12%	1.59%
Rate of income benefits to employees, derived from raising the minimum wage		N/A	(Empl. 1) 2% (Empl. 2) 2% (Empl. 3) 20%	(Empl. 1) 5% (Empl. 2) 5% (Empl. 3) 30%
Rate of income benefit to owner derived from raising the minimum wage		N/A	5%	5%

Conclusion

The act of raising the current minimum wage does not pose any harm to anyone nor to anything. However, it clearly represents a timely opportunity to correct an age-old and unjust wage scale – rooted in the era and mentality of slavery.

And, if a new minimum wage were formulated properly, perhaps along the line shown above, it would become a win-win proposition in socio-econo-political terms to all. And yes, even business owners could profit from it.

PS: Naysayers are welcome to prove the aforementioned proposal wrong.