Commentary: The Economy Isn’t a Pizza, But Small Business Cost Is – By John Schnatter (Real Clear Politics) / Mar 01 2021
To illustrate the flaws of socialist thinking about wealth distribution, legendary free market economist Milton Friedman was fond of telling people that the economy isn’t a pizza, with only so many slices available to be divided fairly among everyone. In reality, Friedman explained, the economy is technically limitless — one person’s having X amount of money does not mean that there is only Y amount of money left over for everyone else.
However, while a pizza may not be totally applicable as a metaphor for the economy as a whole, it is an excellent metaphor for a small business’s operating budget — which is why the proposal to raise the federal minimum wage from $7.25 to $15 an hour will be harmful to small business entrepreneurs and the people they employ.
Proponents of raising the federal minimum wage insist that the current minimum wage is not a “living wage” and is not enough to lift people out of poverty. While everyone would like to see wage earners make more pay, raising the minimum wage would actually push more people into poverty than it would lift out of poverty.
Running a small business costs more money than one can possibly imagine. Small business owners need to pay for utilities, product, advertising, insurance, taxes, and wages, just to name a few things. But business owners only have a limited amount of money to spend on this stuff, an amount that’s tied directly to their revenue.
