If minimum wage is increased....?

Question

don't you think it should be law that when this happens that every employer should be required to increase everyone's income to compensate for this? After all, it is due to increasing costs of living, which in turn makes businesses more money in the long run.

Answer 1

First: the minimum wage isn't increased to compensate for higher cost of living. It was supposedly created to ensure that people made enough money to live on, but in many parts of the country minimum wage was never enough to live on. Claiming that a single, fixed wage is sufficient in all regions of the company is blatantly false; housing costs alone are incredibly disparate.

So, why does the minimum wage exist? It was actually created to prevent employers from using slave labor; that is, taking advantage of immigrants and others by grossly underpaying them, or not paying them at all, or forcing them to work for a year before receiving a lump-sum payment. The minimum wage attempts to guarantee that every person employed in the United States (with exceptions; more in a moment) makes at least a basic stipend, whether it is a living wage or not.

To reinforce this idea, consider waitstaff. Waitstaff are exempt from the minimum wage, because they make money from tips; from the government's perspective (thanks to restauranteur lobbying) expected tips can be counted as part of the minimum wage. If the government were attempting to guarantee a living wage, waitresses would get the minimum wage as well; that they do not is an acknowledgement that being a waitress guarantees a basic stipend by virtue of tips, so the minimum wage is not necessary to provide that stiped. Once again, whether it is a living wage or not is irrelevant.

So why raise the minimum wage?

1. It makes poor voters happy, and poor voters outnumber wealthy voters (middle class voters generally don't care about this issue);

2. Thanks to inflation, an amount that was once a basic stipend intended to prevent people from being taken advantage of has become an amount that is tantamount to being taken advantage of.

So what of the businesses that have to lay off people if the minimum wage is increased? My personal view -- and I'm sure many will disagree -- is that any business that cannot afford to bump employee salaries by a dollar or two is a non-sustainable business that is poorly run.

Consider: a business with 25 employees, all part-time, who each work 20 hours a week. Bump them each a dollar; that's $500 a month. If a business requiring 25 employees is not making a net profit sufficient to cover an increase of $500 per month, that's a horribly inefficient business, and one highly susceptible to going bankrupt from a supplier going out of business or raising their rates slightly.

So why do people get laid off when the minimum wage goes up?

1. there are many poorly-run businesses out there, and there will always be some right on the edge of profitability;

2. it is an economic fact that some businesses will tolerate inefficiencies at $5 an hour that they won't tolerate at $6; some businesses are going to be right on that line, no matter where that line is ($4 to $5, $6 to $7, whatever);

3. many of these stories are unverified -- one business lays off people and blames it on the minimum wage, and via word of mouth it becomes ten businesses, then businesses all over the state -- when it's really just the one.

Answer 2

The government should have no say whatsoever on wages. Your pay should be decided between you and your employer. If you ask for too much, the employer can decide not to hire you. If the employer won't pay enough (what many call a "living wage") you can look for work with someone else. The end effects of increasing minimum wage are inflation and increased unemployment among those at the bottom of the pay scale. Imagine if they raised the miniumum wage to $1000 per hour. People who didn't understand how economics work would think "Oh goodie, I'm going to be rich!" until they were laid off because their employer couldn't afford to pay them that much.

Answer 3

Why should the government be able to tell a private business how much they are going to pay a person? If you require everyone to get a raise when you increase the minimum where are the businesses going to get the money to pay for that increase. They will raise costs causing inflation there by wiping out that government mandated pay increase.

BTW - Increased cost of living do not make companies more money. Their costs increase with the countries' cost of living.

Answer 4

Minimum wage should be abolished. I the work you do is worth more than you are getting paid, the competition will offer you more. If it isn't, increasing minimum wage is more likely to eliminate your job.

Your raise is effective when your are.

Answer 5

I think minimum wage should be increased when congress increases their own pay. If they're not willing to increase minimum wage then they shouldn't be given an increase in pay.

Answer 6

most employers do... it really does suck when they don't. I know that people keep catching up to my salary when minimum wage goes up, and that sucks that new people make almost as much. *sigh* what can you do? You could try asking your boss for a raise, no harm trying.

Answer 7

No, that idea is just ridiculous. It would force employers to fire many of their employees and rehire others at a lower rate of pay.

Answer 8

They already do. That's why so many minimum wagers, mostly teenagers, are getting laid off in Arizona.

Answer 9

i've had the same thought...i think it should be, that would be really nice, and would also make it a lot easier to live...i doubt they will though, i havent heard anything about that.

Answer 10

Most bigger businesses do, it's the smaller ones that you have to fight with.