What are the Pros and Cons of minimum wage?

Answer 1

Requiring companies to pay a minimum wage is wrong. But only if you stop illegal immigration.

This is part of a market based economy. If you did not have a minimum wage and NO illegal immigration, salaries for lower skilled occupations would go up simply because companies would not be able to find people to work these jobs at for low wages.

However, when you introduce the illegal worker to the equation this completely alters it. Now, you have a group of people that allow employers to bypass the minimum wage laws, pay these illegal workers less; and over and above this, reduce the salaries of everyone else is every job market segment that does not require higher education to obtain.

I used to say higher education and specialized vocational training, but the specialized vocational training option is starting to wane. Today, more and more illegal workers are working as car mechanics, electricians, and plumbers than even just 10 years ago.

Answer 2

A lot of the arguments against minimum wage are based on three points.

1. Some believe that the free market will naturally regulate wages, and it's government interference if we attempt to manipulate that - instead we should blindly trust businesses and competition for workers to take care of this. This, however, neglect the fact that there is no such thing as an entirely unregulated capitalism. We have lots of regulation no one wants to get rid of (40 hour week, overtime, wrongful-termination policies, workers comp, etc). It also neglect the fact that with mega-corporations like Wal-Mart, there is less and less competition to drive up wages.

2. Some suggest that very few people actually get minimum wage. However, this argument also falls apart for two reasons. First, if no one actually gets minimum wage, then changing it will make no difference. Secondly, changing MW has a ripple effect, driving up the wages of people making more, and so actually increases a lot of wages - far more than just those receiving benefits.

3. Incresing MW just increases prices accordingly, or increases unemployment. This, however, is demonstrably false just by looking at history. When the MW has been increased in the past, it has had no discernable effect on unemployment, and the effect on inflation has been vastly less than the benefits received by the workers.

The arguments for it are simple - if you give people the ability to support themselves through work, they will. If working legally doesn't allow a person to support his/her self (and the kids too), then people will begin to do illegal work of some kind.

Personally, I want to enable the honest to stay honest, and I want to keep people contributing to the economy and the tax base, which stops when people work illegally.

Answer 3

Minimum wage raises help workers earn a salarly below the poverty line rather than WAY below the poverty line. It has a "trickle up" effect giving millions of workers higher salaries. This distributes wealth more evenly, enabling more people to afford goods & services, making a boost to the economy more effective than Bush's "tax cuts". This is because of additional money provided to low income people, nearly all of it is spent and not saved. When people spend their money, the economy benefits. It also serves as an incentive for people to work rather than earn welfare, because there is more benefit to working a minimum wage job when you earn more $$$. This means that more americans are employed and employers aren't struggling to fill minimum wage jobs. It also prevents the exploitation of workers who have little labor power (hence why they are earning minimum wage). And are routinely exploited anyway.

People against the minimum wage argue it can spark inflation, because employers will attempt to pass along the labor cost increase to the public. But usually, they can't because they don't have the pricing power, so this is a faulty argument. Also, research in past minimum wage hikes has shown that this doesn't happen.

Ultimately, the minimum wage's biggest con is it can sap free money from the labor pool of a company. This means that the grossly hideously overpaid CEO and executive board of a company may see only 15% raises on their multi-million dollar salary rather than 33%. Boo-hoo. It can also put pressure on the companies profitability if the increase in the economy is in a sector that the company does not benefit from a minimum wage increase. For example, if you have a limo company, the minimum wage might be a drain on your company's profits.

Finally, some might see it as a con that it helps hard-working American people live and afford better lives. There is a political party out there that is staunchly against this. They wish to divide the rich and poor as far apart as possible and will gladly take an extra 3% on their executive salary even if millions have to suffer a little bit more for it.

Overall, the minimum wage is extremely good for the populace as a whole, can help the economy, can ward off depression-era like situations where there is not enough demand for manufactured goods, and might even help stem the gross excessive compensation of corporate top-brass that earn far too much for doing far too little!

Answer 4

*sniff sniff* Do I smell a homework assignment being presented to a MB to complete? ;) Just kidding.

The lists of pro and con arguments would be huge: it's a very complex issue. But here are a few highlights:

Pro:
- Prevents employers from bidding their employees' wages down to Great Depression-era levels i.e. abuse of the labor market;
- Provides some stability in the marketplace for basic consumer goods since there will always be unskilled laborers & those laborers need/purchase food, clothing and shelter;
- It insures that low-wage employees get at least a bare minimum of the fruits of their labor;
- It insures that society, not just the whims of employers, plays a role in determining the worth of a day's work.

Con:
- Foreign companies and workers who live in areas with lower standards of living have a competitive advantage over American companies and workers;
- The costs of services provided by minimum wage workers are artifically inflated for consumers;
- Although minimum wage doesn't actually *prevent* job creation and retention, minimum wage puts a damper on entry-level job creation and retention;
- Reduction in national economic growth through the reduction in availability of affordable labor.

Answer 5

Raising the minimum wage is nothing more than a great way to earn votes. "I want to raise minimum wage for you!" Doesn't that just sound good? The problem is how it will effect the overall economy. Two things could happen, and neither of them is good. First off, the workers will make more money. The question is, where will this money come from? The companies will have two choices, raise the prices of their goods, or lay people off and demand more work from a smaller workforce.

Raising the prices of goods on the market will make the raise in minimumwage obsolete. Sure, the people may be making more money from check to check, but they are also spending more money to live as a result.

Companies laying off their workers is not going to help anyone either. Sure, the person who is asked to stay on is making more money, but they are also working harder than before. This causes a loss in job satiafaction, the root of a lot of domestic disputes and even suicide. Not to mention what is to becopme of the people who have been laid off. More taxes will be needed to pay for their unemployment. More people will be tossed into the welfare system, and we all know that this system is in dire need of some drastic reforms.

I thought of another result of the raising of minimum wage. Smaller businesses will not be able to pay their overhead (the cost of actually running the business). They will be forced to cut back on operations in order to meet the wage hike. Less and less people will want to try their hand at running their own businesses.

Answer 6

Forcing an employer to pay a wage, even though the employee isn't worth it, hurts businesses, and lowers the drive of the people working for it.

People should earn what they are worth. If they work hard, they will be worth more, and an employer would rather pay that person a higher wage than 2 people at a lower wage.

Answer 7

One pro is that we have a clear standard to use for setting child support on dead-beat fathers who won't work...

In my opinion, the biggest con is that minimum wage will ever help a person raise their standard of living (and by con, I mean con)...

When the MW goes up, so does everything else.

Answer 8

Pro: Increase income of the lowest paid workers.
Con: Increase unemployment among the least skilled workers. Tends to be inflationary.

Answer 9

Good for the employees. Not so good for the employers. Most people don't realize that their employers are actually paying out almost double the amount in taxes that the employee is earning in wages.

Answer 10

what Ruth said