Who would ultimately benefit from raising the minimum wage from $5.15 to $7.00, if anybody?

Answer 1

This is an economics question, so I'll start by giving the standard economist's answer of "it depends".

Usualy the rationale for increasing minimum wages is to help those with low skills and low productivity. However, it doesn't help all of them.

In equilibrium, employers will pay workers based on how much value they add to a business. For example, if it costs $5/hour to employ someone and they can generate sales with profit of $5.50/hour after taking into account all of the costs of hiring them, overheads etc, then they will do so since they are 50c better off. If the person only generates $4.50 of profit after all costs are taken into account, then they won't.

If current minimum wage is $5.15 in the US, then employers have an incentive to hire anyone who can make more than $5.15 profit for the employer each hour.

So what happens if the minimum wage increases to $7.00? Some people who are currently being paid less than $7.00 will get a pay increase to $7.00 and be better off (yay)! However, this will only happen for those people who are generating more than $7.00 an hour in profit. Many workers being paid minimum wage might only be generating say $6.00 hour in profit for the employer. The employer will simply sack these people since they would be losing $1.00/hour if they keep them on. Therefore, you will also find a large number of people will lose their jobs making them unemployed (boo)!

Therefore in the short-run, those low paid that are lucky will keep their jobs and get paid more, thus reducing inequality. Those who are unlucky will lose their jobs, thus increasing inequality. What your view is of the net effect will depend on which group of low paid workers you give greater importance to.

In the long-run, you also find that many people get a low paid job to gain employment skills so that they can work their way up and get a better paid job down the track. However, high minimum wages prevent people from the initial job when they are still low skilled and thus may never get the chance to improve their skills unless governments also provide them with increased free or low cost training opportunities.

Answer 2

Everyone because people would be able to buy more, and so they would put more into the economy. Also the competitive job market (the highering end of it) will be forced to raise wages or incomes or fear loosing their workers to places that are offering better pay. It comes down to what businesses want to pay for quality work and what businesses want to pay for the cheapest crapiest things to get the most profit out of it. Some times the better quality the better the product. Thus if the bottom level of pay is raised a lot but not all will have to follow suit. This is why businesses do not like the idea. However, these businesses do not realize that it’ll mean more purchasing power for their targets audiences, thus it will level out to a win win situation in the medium/long run. Of course that’s to if say greedy people have any sense at all! Again most see it as a loose loose situation, which is rediculus if you look at it rationally.

Of course "robtiger2" does have a good point...
However, since that's the case then I say, people need to be given affordable standards of living. Again that way people have more purchasing power to help the economy instead of scraping by just to pay the usual bills and not contribute to anyother industry. This to mean seems clear enough. Again, that's to say if greedy people had any sense at all... I swear they have no rationality...

Answer 3

The person that is working for minimum wage and the people the need to support , it may not seem like much but if you have yo pay your health insurance out of that $1.85 is going to help out.,talk about education , so many people with a great education are having hard times trying to find job's now . There are so many layoff's and plant closings that trying to find a job is becoming harder and harder,so to some $1.85 may not seem like nothing to others it is a loaf of bread , a half gallon of milk ,and if you add that up in a 40 hr work week that would make it be $74.00 dollars enough to pay a bill or even fill a gas tank with the way the gas prices are going.

Answer 4

The people who would benefit are those who get the wage rise and keep their jobs. Those who lose their jobs would be significantly worse off. Everyone else who has to pay higher prices, and firms who earn lower profits along with their management and shareholders, would be worse off - but not by much.

Answer 5

minimum wage wasnt meant to sustain a family of 4! it doesnt need to be increased...if people need more money they need to get an education like the rest of us!

no, robtiger2, minumum wage is 5.15. unless you are a server/waiter, then you get paid $2.13 + tips.

Answer 6

Isn't the minimum wage $6.75 ? anyway, I believe it would not change anything. sure people would make more, then there bosses would have to raise their prices to afford it... then the people would have to pay more to buy there things... eventually they would be in the same boat. this seems so simple to me but the lib dems don't get it.

Answer 7

Well I guess that that is not a lot, but there are a lot of people living with that so any little help is a BIG help for people on need, yes, a lot of people got a degree, but can´t find a decent job, so mostly to people between jobs, people with No college there are a LOT of these people and WE NEED TO PAY THEM MORE but its a vicious circle like rob tiger said

Answer 8

Some poor schlep who fries your burger for you; maybe he'll even make enough to afford health insurance.

Who doesn't benefit? CEO's, share holders.