Dave Ramsey Is Going To Get Hate for This

Summary

In 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

00:00

💼 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.

05:01

🌎 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.

Keywords

💡Minimum Wage

Minimum wage refers to the lowest hourly, daily, or monthly remuneration that employers are allowed to legally pay their workers. In the video, the discussion revolves around the proposal to raise the minimum wage to $15 an hour. The speaker argues that such an increase would lead to higher prices for goods and services, effectively negating the benefits for workers as their cost of living would rise.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video script uses inflation as a key argument against raising the minimum wage, suggesting that wage increases lead to higher production costs, which are then passed on to consumers in the form of higher prices.

💡Economics 101

Economics 101 typically refers to introductory economics courses that cover basic economic principles. The term is used in the video to emphasize the fundamental nature of the argument being made about the relationship between minimum wage, pricing, and inflation, suggesting that the speaker believes the consequences of minimum wage increases are basic economic truths.

💡Political Football

In the context of the video, 'political football' refers to an issue that is used by politicians for their own advantage, often without a genuine intent to resolve it. The speaker claims that raising the minimum wage is more about political posturing than about addressing economic realities, as it is portrayed as a way to gain support rather than an effective policy.

💡Great Resignation

The Great Resignation is a term used to describe the large number of workers who left their jobs during the COVID-19 pandemic. In the video, it is mentioned as a consequence of businesses raising wages, which led to increased inflation and, according to the speaker, a false perception of economic prosperity.

💡Supply and Demand

Supply and demand is a fundamental economic concept that describes how the availability of a product and the desire for it affect its price. The video discusses how a labor shortage during the pandemic led to an increase in wages due to supply and demand pressures, rather than government regulation.

💡Taxation

Taxation is the process by which a government raises revenue by levying a charge on the income, wealth, or transactions of individuals and businesses. The video argues that raising taxes on corporations or businesses will lead to higher prices for consumers, as the increased costs are passed on to them.

💡Capitalism

Capitalism is an economic system based on private ownership of the means of production and their operation for profit. The video defends capitalism as a system that has led to a high quality of life in America, contrasting it with socialism and communism, which the speaker claims do not lift people out of poverty.

💡Recession

A recession is a significant decline in economic activity that lasts more than a few months, typically visible in real GDP, income, employment, and industrial production. The video mentions that despite popular belief, America is not in a recession, but inflation is making people feel as if it is.

💡Balanced Budget Amendment

A balanced budget amendment is a proposed constitutional amendment that would require the federal government to not spend more than its income, effectively balancing its budget. The video suggests that a balanced budget amendment would be a step towards fiscal responsibility and economic stability.

💡National Debt

National debt refers to the total amount of money that a government owes its creditors. In the video, the speaker expresses concern about the high national debt of the United States, suggesting that it is a significant issue that politicians are not adequately addressing.

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

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