Dave Ramsey Is Going To Get Hate for This
Summary
TLDRIn this episode, the host delves into the economics of raising the minimum wage, highlighting the misconceptions and the real-world consequences. He argues that only 1.1% of Americans rely on the minimum wage, and increasing it leads to inflation without benefiting the majority. The discussion touches on the domino effect of wage increases on business costs and consumer prices, emphasizing the importance of understanding basic economics. The host also criticizes political posturing around minimum wage as a distraction from more pressing economic issues like balancing the federal budget.
Takeaways
- 📈 Raising the minimum wage can lead to increased prices for goods and services, potentially negating the financial benefits for workers.
- 🤔 Only a small percentage (1.1%) of Americans are on the minimum wage, suggesting that raising it may not have a widespread impact.
- 📉 The speaker argues that increasing the minimum wage is a political move rather than an economic one, as it's often used as a talking point without substantial effect.
- 🛒 Companies like Walmart and Target voluntarily raised their minimum wage during COVID-19, which the speaker suggests led to increased inflation.
- 💸 The cost of living can increase when businesses pass on the cost of higher wages to consumers, which is described as a domino effect.
- 🚚 Higher operational costs, such as fuel for delivery trucks, can also lead to increased prices for consumers.
- 💼 The speaker emphasizes that businesses must charge more than their costs to remain profitable, which includes the cost of labor.
- 💵 Taxes on corporations are also passed on to consumers in the form of higher prices, according to the speaker.
- 🌎 The speaker compares economic systems, suggesting that capitalism has provided a higher quality of life in America compared to communism or socialism.
- 🏦 The national debt and the lack of a balanced budget amendment are cited as significant issues that politicians should address to truly help the 'little man'.
Q & A
What is the main argument against raising the minimum wage to $15?
-The main argument is that raising the minimum wage causes inflation. Businesses pass on the increased labor costs to consumers, raising the prices of goods and services. This could ultimately leave people in the same financial position as before.
How does raising the minimum wage affect businesses, according to the speaker?
-Raising the minimum wage forces businesses to raise prices to cover the higher labor costs. If businesses cannot pass on these costs, they risk losing money and potentially going out of business.
What percentage of Americans are earning minimum wage, according to the speaker?
-The speaker states that only 1.1% of Americans are earning minimum wage.
What are some examples of companies that raised their minimum wage during COVID?
-Walmart and Target raised their minimum wage voluntarily during the COVID pandemic, with many other companies following suit.
How does the speaker relate minimum wage increases to inflation?
-The speaker claims that after companies raised wages, inflation became 'stubborn' and that inflation from 2020 to 2022 showed the negative effects of wage increases on the economy.
What is the speaker's stance on corporate taxes?
-The speaker argues that raising corporate taxes leads to higher prices for consumers because corporations pass the tax costs onto the buyers of their products or services.
What economic system does the speaker believe provides the best quality of life?
-The speaker believes that capitalism provides the best quality of life, contrasting it with communism, which the speaker claims leads to shortages and poor-quality goods.
How does the speaker view the political debate around minimum wage?
-The speaker sees the debate as 'political bull crap,' arguing that both parties use it as a political tool rather than genuinely trying to help low-income workers.
According to the speaker, how does a free market influence wages?
-The speaker believes that a free market, driven by supply and demand, naturally raises wages. For example, during COVID, a labor shortage forced companies to offer higher wages to attract workers.
What is the speaker's criticism of both political parties regarding the federal budget?
-The speaker criticizes both parties for not caring about balancing the federal budget, claiming that they tax too much and spend excessively, harming small businesses and the economy overall.
Outlines
💼 Economic Implications of Minimum Wage Hike
The speaker discusses the potential economic consequences of raising the minimum wage to $15 an hour. They argue that such an increase would lead to higher prices for goods and services, effectively negating any financial benefit for workers. The speaker criticizes the idea as a political move rather than a genuine solution, pointing out that only 1.1% of Americans are on the minimum wage. They reference the COVID-19 pandemic's impact on wages and the subsequent 'Great Resignation,' linking these events to inflation. The discussion emphasizes the importance of understanding basic economics, suggesting that increased labor costs are inevitably passed on to consumers, leading to higher prices.
🌎 The Fallacy of Minimum Wage as a Political Tool
In this segment, the speaker further elaborates on the political nature of minimum wage debates. They assert that raising the minimum wage is more about political posturing than actual economic strategy, as it affects a very small percentage of the workforce. The speaker also addresses the issue of union contracts, which may be tied to minimum wage increases, suggesting that the impact is more widespread but still minimal. They argue for a free market approach to wage determination, citing the example of companies like Walmart and Amazon voluntarily raising wages due to labor shortages. The speaker concludes by advocating for tax cuts as a more effective way to help workers, criticizing political parties for not genuinely addressing economic issues and for failing to balance the federal budget.
Mindmap
Keywords
💡Minimum Wage
💡Inflation
💡Economics 101
💡Political Football
💡Great Resignation
💡Supply and Demand
💡Taxation
💡Capitalism
💡Recession
💡Balanced Budget Amendment
💡National Debt
Highlights
Discussion on the pros and cons of raising the minimum wage to $15 an hour.
Argument that raising minimum wage leads to increased product and service prices.
Economics 101 approach to understanding the impact of minimum wage on the economy.
Critique of the idea that raising minimum wage is a simple solution provided by 'Santa Claus'.
The claim that only 1.1% of Americans are on minimum wage and its implications.
Analysis of how companies like Walmart and Target voluntarily raised wages during COVID.
Connection between wage increases and the 'Great Resignation' followed by stubborn inflation.
Explanation of how raising the cost of labor affects the cost of goods.
The fallacy of corporations paying taxes; instead, they pass the cost to consumers.
Emphasis on the importance of understanding economic principles to avoid politicization.
Example of how increased fuel costs affect the price of goods in stores.
The domino effect of increased business costs on consumer prices.
Critique of political promises to help the 'little man' through minimum wage increases.
The reality that most businesses are already paying above the federal minimum wage.
Discussion on the difference between supply and demand driving wages up versus regulated pressure.
The impact of union contracts being indexed off of minimum wage changes.
Call to action for politicians to cut taxes and balance budgets to truly help the average American.
Reflection on the quality of life in America compared to other countries with different economic systems.
Final thoughts on the political nature of minimum wage debates and the importance of economic understanding.
Transcripts
[Music]
brought to you by the every dooll app
start budgeting for free today Kevin ask
with the presidential election coming up
I have been doing research on who to
vote
for sorry I can only laugh at that uh
some politicians want to raise the
minimum wage to $15 an hour what are the
pros and cons of this my thought is that
it means products and services will go
up in price and everyone will be right
back to the same Financial spot they
were in before the increase okay this is
one of my favorite things to talk about
this is economics 101 and Dave I talk
about this some on my show and it's
hysterical to see people just come at me
with the vital and the hate over basic
economics as though I came up with it uh
but it's very simple when a minimum wage
is raised um it puts Financial pressure
on the economy in a negative way U but
but the bleeding hearts and people who
don't understand basic economics go well
this Santa Claus Is providing money
right but the reality is is that those
in customer pays for it well yeah the
grocery store the the uh fast food place
passes on the increased cost of your
combo meal and so you gripe about
inflation and yet you celebrate federal
minimum wage ideas now let me just
address that uh this is nothing more
than a political football because
1.1% 1.1% of Americans are on the
minimum way that's exactly right and one
freaking percent right and if you look
at what happened during covid there was
societal pressure on this and we saw a
couple big stores namely Walmart and
Target raised their minimum wage
voluntarily and a lot of companies
followed suit and then came we went from
$10 to $15 to $20 in about 18 months and
then you saw the great resignation as a
result of that and now very stubborn
inflation so if you want to know how it
actually works pay attention to how
inflation Rose from 2020 to the end of
2022 so it's not argu able you can't
debate it you know you can chase Your
Tail if you want to it's mathematics but
it just it is it's math when the person
putting the bread on the
Shelf at the grocery store makes $20
instead of
$10 that cost of that bread has to go up
or the grocery store loses money and
goes out of
business and the cost of the bread goes
up and so you buying the bread pay more
the cost of the eggs go up when the
person has hand Ling the eggs is paid
more it's very simple it it's uh because
it it's like we're going to raise taxes
on corporations no you're not
corporations don't pay
taxes they pass the cost of the tax
through to the buyer of their goods and
services their customers pay the taxes
they're built into your product so if
you raise taxes on corporations you
raise prices on the people that are
doing it it's economics it's not it's
not it's not liberalism or
conservativism it's just freaking math
if you run a business you have to charge
more than it costs you mhm which by the
way Dave let's point this out because we
have a very large audience all political
spectrums make sure you hear this if
you're somebody right now and there's a
lot of Americans three out of five
Americans new data just came out believe
we're in a recession which we are not by
the actual definition of it but it's
inflation that's making people feel this
way hear this when you hear certain
people on the left say we're going to
raise taxes on small business and we're
going to raise taxes on the corporations
what you don't understand is is the
opposite of that policy to cut taxes on
small business to cut taxes on big
business means that the cost of
everything in your life will go down
which means you keep more of your
paycheck if you're disciplined it's
really important that people understand
this stuff because it gets politicized
and you you think that there's not a
there's not you think it's a one and
done but all it is is a chain reaction
you're pushing a domino when you raise
the cost of something in business that's
right you're pushing a domino and then
the next thing down costs more so if G
here's an example okay if gas is $5 a
gallon instead of $2.50 a gallon the
truck delivering the stuff to the
store has to pay twice as much in fuel
cost so they're going to charge more to
deliver the stuff to the store so the
store is going to charge you more when
you buy that loaf of bread that came off
the bread truck y it it it's a domino
there's a Domino's going all the way
down the line here and and so you are
paying for the truck driver's higher
fuel bill when you buy stuff that that
truck carries by definition you don't
have a choice and it's not a you know
you can not like that or like that well
that's evil it's capitalism we'll try
communism if you visited those countries
yeah they have a line to get the bread
the bread sucks you can't get it there's
a shortage because they don't produce
goods and services uh and so these are
what you know people who love communism
are people who have not
traveled okay go to the country I've
traveled all over the world about the
only thing I'm sure of is I'm always
happy when I get back to America okay
and you can dislike some of the stuff
that goes on in America we're not
perfect I don't have that but I got to
tell you man there's very few places in
the world you can have this quality life
and it is this freaking system that gave
you this quality of life so that's your
minimum wage answer oh by the way 1% of
Americans are on minimum wage so if you
raise the minimum wage it does
absolutely nothing so it's political
bull crap is what it is the only other
people that are affected are some of the
Union contracts are indexed off of
minimum wage so whatever minimum wage
does the Union contract gets the same
bump so it does affect actually more
than the 1% but it's still a minuscule
thing it's absolute political bull crap
what does Drive the cost of entry level
work up is a supply demand issue that's
what we ran into at Co there was a
shortage of workers and these stores
were having to pay people more money to
come to work and so that's the only way
they could get them was to pay them more
that is a free market pressure to drive
wages up not a regulated pressure
there's a difference and so in either
case though the $20 person versus the
$10 person putting something on the
Shelf is built into the cost of whatever
they put in the Shelf whether it's
driven by the rise of minimum wage which
it probably doesn't affect that almost
every grocery stor is paying more than
minimum wage almost every restaurant's
paying more than minimum wage they can't
attract workers right now unless they do
targets Walmarts yeah every absolute
fact Amazon everybody nobody's none of
these people are working for seven and a
quarter that's right paying above the
the actual federal minimum wage it is a
you could move the minimum wage and it
wouldn't change those people's pay one
dime that's
correct one
dime doesn't change a thing but but it's
so it's political bull crap we we're
we're For the Working Man we're trying
to help the little man oh bull crap you
haven't tried to help the little man in
decades either one of you if you did
you'd cut your own pay and balance your
budget quit spending s dad gun much if
you want to help the little man you cut
taxes on the little man if you actually
cared about the little man both of you
you RS and D's sicken me that's right
just the CRA we're for small business
you haven't done anything for small
business in decades except tax our
assumptions off I mean it's absolutely
crazy while we're at it uh if if both
parties cared about the average American
and their income and their children's
Children's opportunity we'd have a
balanced budget amendment it'd be a
single issue balance the Federal budget
States all across this country have a
constitutional requirement to actually
balance their state budgets and we don't
have a and we're we're now $35 trillion
doll in national debt and I think it's
the issue no one's talking about it and
we the people come up it's not going to
we just walk around going well they'll
figure it out no they won't and so you
know anyway that's They Don't Really
Care all of this is politics and it's
all perception it's all emotion and um
you know and this idea somehow you're
going to uh straight you know you're
going to ruin the economy so that you
can ruin America it's a bad plan y'all
it's a bad plan because you can't have
this good a life anywhere else anywhere
else in the world the best shot at going
from poverty to wealth in the history of
the world statistically is to be born in
America right now in
poverty versus being born anywhere else
in poverty communism does not lift
people out of
poverty socialism doesn't lift people
out of poverty Margaret Thatcher said it
best so problem with socialism is
eventually you run out of other people's
money Venezuela in the news today today
yeah today all right this is the Ramsey
Show create your free every dollar
budget today the simplest way to budget
for your life
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