$15 Minimum Wage: Why Real Estate Investors Should LOVE This Idea [Opinion]
?Look, I’m a pretty conservative guy.
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And most of my friends will probably hate me after this post… but here’s the truth: I love the idea of raising the minimum wage to $15 per hour.
Let me explain.
Do Minimum Wage Workers Deserve $15 an Hour?
Well, let’s get one thing straight first: I don’t think these people deserve it.
In my opinion, people don’t deserve something like that. As you probably know, I’m a red meat-eating, lumberjack-resembling American capitalist. People don’t deserve a specific income. Things are worth what they are worth, not what the government decides.
Just because they might not deserve it doesn’t mean it wouldn’t help me, as a real estate investor. It probably won’t help them, in the long run, but it will help me.
Why The Minimum Wage Needs to Be Increased
Most of my tenants are minimum wage employees, making around $9.00 an hour right now.
By raising the minimum wage, my tenants will be able to more easily afford their rent. Less trouble getting rent, for now.
Then, rental rates tend to rise based on minimum wage (the lowest common denominator of a society needs to be able to afford to live in an area), so rental rates will start to rise. Inflation kicks in. But my fixed rate mortgages stay the same. My profit rises. The tenant’s living expenses are not 50% higher than before, so they are in the exact same spot after a few years. Sucks for them. But, again, my fixed rate mortgage stays the same.
So, yes, I agree — the major premise behind the “let’s raise the minimum wage” cry is incorrect. It’s not going to help these people over the long term. People’s living expenses always rise to meet their income. Everyone lives above their means. (Be sure to read through “The Simple Action No One Does That Will Make You A Millionaire” for more of my thoughts on that.) Minimum wage tenants will likely be no better off than they are today.
However, I’ll be better off.
Sure, some of my tenants will be able to qualify to buy homes, which means I may lose them, BUT it will lift the real estate market even higher, so I can sell more properties. More tenants who are living with roommates and with their parents will be able to branch out on their own and take the place of those buying houses.
Answering the #1 Objection People Have Against Raising the Minimum Wage
So, what happens when McDonalds has to suddenly pay their employees more money?
The cost of a hamburger goes up slightly. Probably not double. Probably not 50%. But it will go up a little bit.
Boohoo. People in America could handle eating a few less double cheeseburgers if you know what I mean.
Finally, to one more objection: Yes, McDonalds may replace some of these workers with a machine, but that’s happening anyway. No getting around that. But fast food is just one industry of minimum wage workers.
What Do You Think?
What do you think?
Am I crazy?
This post was meant to open up a conversation, so let’s start conversing. Share your thoughts below!