Do you think that increasing minimum wage will help or hurt?

Question

So minimum wage is suppose to be increasing from 5.15 to 7.25 sometime this year. Some argue that minimum wage is so low that it isn't in line with the cost of living--increasing it would help those that needed to be helped the most. Other agrue that minimum wage is exactly what teenagers and unskilled workers deserve. Increasing minimum wage would only increase unemployment and indirectly increase the price of producing goods, causing prices to rise and creating the same situation we are currently in. Which side of the fence do you ride?

Answer 1

The minimum wage will help the employees who receive the increase, there is no doubt to that. But there is a flip side. Basic supply and demand models tell us that if the price of labor goes up, all else being equal, the amount of labor that will be demanded will go down. The situation that we will see is a lot more individuals will be vying for these jobs since the increased wages will cause some individuals who had been unwilling to work before to join the labor market. However, because of the higher price of labor, there will be fewer jobs for these individuals to take. For instance, if we increase the cost of labor by two dollars an hour, do you think Wal-Mart will continue to hire six cart pushers when they could easily get by with the four most productive of them? What will happen is those individuals who's efforts are not worth the minimum wage will be left go. The minimum wage will also lead to increased employment of immigrants who are not subject to the minimum wage. Since these individuals will work for less, businesses are willing to assume the risk to employ them in order to save the money they would have to pay to those subject to the minimum wage. Increasing the minimum wage will simply cause businesses to look more to these black markets in labor. This is just a price floor, and as with all price floors that are set above the level the price would be without the floor, a shortage will result. This will be a shortage of jobs, and other factors will begin to play parts in who gets jobs, much as other factors have played parts in rent controlled areas.

The one upside is that minimum wage is generally earned by teenagers, so the overall impact on the economy will not be as dramatic as it would be if the majority of the population were earning minimum wage.

Answer 2

It will actually help and hurt. It will help those who are currently making minimum wage and keep their job. However if a company decided they can't afford to keep all the people who they currently employ at the new higher wage they may lay some of them off and that would certainly hurt those who lost their job.

Looking at the economy as a whole, the effect is next to nothing. It is one of those sound good issues that politicians push but really has next to no effect good or bad. The reality is that most people make more then what the minimum wage is, so raising it will not help those people. Another thing to consider is whether a person who starts our making minimum wage continues to make minimum wage after working for that company for an extended period of time. Think about it, if you were making minimum wage would keep working there if you did not eventually get a raise? So although it is often reported that some large number of people are making minimum wage, what is not reported is that those people don't stay at minimum wage forever, and if they do it is probably because they are not good workers and do not deserve more then minimum wage.

I find it interesting that many think minimum wage increases will help economy, but we could probably all agree, if we were to raise the minimum wage to say $50/hr that would cripple the economy. This is a crazy senerio but it does serve to make a point. The only difference is that a jump to $50 would be so huge and dramatic that the effect would be noticed by everyone. The effect of raising the minimum wage to say $7 is just so small it is not easily noticed.

My final thought is, if minimum wage is raised, the cost of goods and services will also rise. This will partially erase the gains to the worker who got a raise by increasing minimum wage, while it will certainly hurt those of us who don't make minimum wage and are not getting a raise.

Answer 3

Generally, the historical effect has been a combination of higher prices and higher teenage unemployment.

Economists David Card and Alan Krueger at Princeton have done a great deal of research on this topic for decades; but when have politicians allowed facts to get in their way?

Something that California tried in the late 1980s, and actually worked quite well, was raise the minimum wage for ages 19+.
If the minimum wage was tiered based on what would be the average skill set, it would likely not have as large an effect on teenage unemployment-----additionally the hike would target the people the politicians keep shrieking about.
Even further, since that group is relatively small (teenagers are the largest group of minimum wage earners in the country), it probably wouldn't mess with prices that much, either.

Answer 4

Raising the minimum wage will condemn many people to chronic unemployment. Because they aren't valuable enough to an employer to hire at the higher minimum wage, they won't get a first job. Without a first job, it is nearly impossible to move up to a better, higher paying job.

As happens in any market: raising the price of something almost always decreases the amount that is purchased. Raising the minimum wage raises the price of labor, so people will buy less of than they would at a lower price.

Answer 5

It should actually be above the hourly cost of a welfare check. It should motivate some to find a job, get from under welfare (because of a very low 5.15 an hour, who would want to work for that chump change?) They say it will hurt the small businessman but I don't think so. They've been hiking prices for so long that this won't even be noticeable. If anything it will diminish the welfare rolls and motivate people to work, even flipping burgers.

Answer 6

This is actually a micoeconomic question. An increase in wages will decrease profit and so forth, but also increase spending and savings. But perhaps the biggest change you need to think of is that of labour changes. As wages in certian areas increase, workers from other areas want to get a job in those jobs that pay more. =) help that helps.

Answer 7

Hurts employees(fewer are hired). Hurts companies(raises price of labor). Hurts consumer(higher prices of goods to compensate for higher costs) Hurts old people on fixed income(Because of inflation). Hurts teenagers(can't get part time jobs for spending money).

Helps wage workers in short term ONLY before inflation reduces the value of their wages to the value of the work produced.

The only way to increase wealth in wages is to increase productivity.

Answer 8

Whatever the outcome is... the employee and the employer will be hurt and only the Banks would be happy as the Government watch and monitor the profit stability for every one.

Answer 9

nicely whilst minimum salary is going up organization/ shops or what have you ever would desire to seize up on that loss. some places cant handle to pay for to grant pay will enhance to all people so as that they fire human beings. Or they enhance expenses on their products which in turn facilitates shrink the positives on elevating the minimum salary fee

Answer 10

one real q seems to me that rather than tne issue of minimum wages itself how are we going to ensure that whatever the amount is, it is ENFORCED and goes to the RIGHT hands sans corruption.

For Each person and profession - dignity and respect need to be given. and if that is given by increasing the wages, that would better their living as well, I'm all for it!!