What the New $9.00 Minimum Wage Has to Do with Gold

Read More: http://www.investmentcontrarians.com/inflation/what-the-new-9-00-minimum-wage-has-to-do-with-gold/1443/

Just like he did in 2011, President Barack Obama is taking another stab at increasing the federal minimum wage in order to help the lowest income earners in America. With the President’s proposal to raise the minimum wage to $9.00 an hour by 2015 from the current $7.25, in theory, the move upward shift should help, as it translates into roughly $3,640 extra annually. The proposal also links the level of the minimum wage to the inflation rate after 2015.

The rationale behind the President’s thinking makes sense, and I truly wish it could work; but my view is that the impact of higher jobs market wages on the lower level service and manufacturing jobs across America could likely drive prices on goods and services higher for the consumer, which means greater inflationary pressure. If this becomes the case, you will need to start investing in gold.

For instance, higher jobs market wages for service jobs, such as restaurants, will likely not be absorbed; rather, the higher wage costs will mean higher food costs at all levels from fast-food to high-end restaurants. The impact will be especially hard on the low income earners who, in general, may be more inclined to eat fast foods. The same goes for other goods and services, which means that while the lower income earners would earn more money with a rise in the minimum wage, they’ll end up paying more for goods and services.

Read More: http://www.investmentcontrarians.com/inflation/what-the-new-9-00-minimum-wage-has-to-do-with-gold/1443/