Minimum Wage and Manufacturing

The owner of a Chicago based manufacturer recently said, "Before, I couldn't compete with Mexico and China. Soon I won't be able to compete with Ohio."  Then he sold his +50-year-old company.  Those manufacturing jobs moved out of the area with the new owner.

While (as of May, 2015) efforts to increase the minimum wage in Chicago have not been successful, the threat and worry of a minimum-wage increase was enough to send this particular proprietor into retirement and perhaps many others especially in the regions instituting their own minimum wages.

The theory sounds noble, at first.  Charge the employers more for their labor and they can pass those costs onto the consumer.  That might work in the retail and services industries where a given customer would not drive to another state to purchase a hamburger, but how about in a business to business environment where a purchasing manager has a choice between a potentiometer built in Chicago versus one made in Tennessee, or offshore. 

It also does not take into account that the consumer, in the services example, who has to pay more for his burger, might be a minimum-wage earner himself.  Now his costs have just increased negating some of the benefits he received in those mandated increased wages.

So what about the minimum wage in Chicago?  Should manufacturing be exempted from the city's minimum wage increase, so that manufacturers could not just compete regionally, but nationally and internationally as well?  Should the minimum wage be a province exclusive to the federal government?  Or is the minimum wage just a relic of our past that does not benefit those at the lower wage levels as many economists are now purporting?

There is definitely not an easy solution for this heated debate and we are, admittedly, a little biased.  However, for us it is Economics 101, the manufacturing industry creates wealth and the service industry transfers it.

Comments welcome.