Why would anyone be against minimum wage in California?

Question

I live in Los Angeles California, and minimum wage isnt enough to survive its only $7. 50. Why do you think its not higher. Why would anyone be against it?

Answer 1

Simply beause many economic theorists actually argue that the mere existence of a minimum wage reduces the number of overall jobs available, limits efficiency in an open market economy, and reduces opportunity rather than creating them.
An economy as a whole would be better off without a minimum wage, simply put.

Answer 2

This is about the UK but applies to all job markets including California:


1. A NMW set above the free-market wage for certain groups raises the marginal cost of employing people - so firms will cut jobs, reduce hours of work for employees and unemployment will rise

2. Other workers will demand higher wages to maintain pay differentials (this is known as "pay leap-frogging"). An increase in the total wage bill may cause cost-push inflation and damage the price competitiveness of UK producers in international markets

3. Young and low-skilled workers will lose out - firms will tend to employ older workers whose experience is greater. There will be a substitution effect that works against younger participants in the labour market

4. Some firms may cut back on investment in worker training because of falling profits

5. A minimum wage will not ease poverty because many poor households do not have a low-income earner. Poverty is concentrated in those groups where no one is in paid employment. A minimum wage has little direct effect on these households - better to introduce a minimum income guarantee

6. A NMW does not take into account regional differences in cost of living and will have a distortionary effect on the way the UK labour market works

Answer 3

There are competing arguments on whether a minimum wage actually helps the economy or not. A healthy economy helps the rich, middle income and the poor. So what's best for everyone involved?

Some economists argue that minimum wages cause companies to raise prices for the products they make. That is true, obviously. But economists also point out that the end result of this example is that the since products cost more to make, less people can afford them. This hurts the poor more than the rich and the middle classes because the poor have the least amount of expendable income. This problem spans such issues as clothes and entertainment to to larger issues like food on the table and a roof over every person's head. Furthermore, the goverment knows that the larger problem is that if people don't have the means for necessities like food and housing, the goverment's got to pick up the tab.

And what about things like movies, vacations and restraunts. If people are low on money, they eat at home, don't take vacations and don't go to the movies. They don't buy homes, cars, tvs, cell phones and all of the things that keep money flowing through our economy and people at retail stores, service indistries, and home builders in jobs. There is definately a place for individual savings with everyone, but when people spend money, the economy, for the most part, is at its healthiest. So raising the minimum wage is good. And again, if people can afford to save just a little money and they encounter a crisis like an accidnet and need hospitalization, guess who is going to be picking up the tab again...

Actually, if you look closely at the issue, it is bipartisan. Really, both parties know that minimum wage must be raised periodically. It's best for the economy. But if you were a business owner, would you want to be forced to pay more money to your employees based on an arbitrary standard rather than performance based rewards for your employees? The answer is probably not. Big government demands business owners raise the MW and of course, business owners are incensed. The average business person rarely looks at this problem the way economists do and naturally feel stressed because of the higher cost of doing business. Furthermore, the average business person has not been taught the economic theories behind the overall benefits that raising minimum wage on society as a whole.

Oh, and don't forget. Big businesses have strong lobbies that try to talk elected goverment officials from changing the minimum wages. They are a very strong lobbying force and can twist a lot of political arms.

There are arguments against raising minimum wage too, but they rather pale in comparison to the reasoning I gave you above. Many people don't like the intrusion of government into business and feel that financial business arrangements will acheive the best results if people are allowed to bargain freely. This is the "lesse faire" theory of governement or "leave it alone" theory. This is their strongest argument and is not without merit. Many economists believe that when a government influences business, the result is artificial and peremptory. For example, think here about tarriffs, (taxes on imported goods), and whether they are good for the contries involved. Most economists think not. Goods simply end up raising the cost of the goods being imported. Therefore, less people can afford them. Don't forget that the poor always get hit the worst because they spend a much larger portion of their income on goods. (In that way they also pay a bigger percentage of their paycheck on sales taxes. The poor buy more taxable goods than do the rich and middle class. The latter groups buy stocks and other commercial paper that are not taxed where a poor person buys almost all taxable items for his entire month's salary. That is why a sales tax is considered "regressive" or the worst for the poor.

Just some food for thought on quite a complicated issue that politicians and economists have been arguing about for years. Hope this helps. :-)

Hope this helps.

Answer 4

I do not agree with the opinion I will relate, but
I at least know the argument...

If companies have to pay their employees more money,
then they'll be able to afford fewer employees. Therefore,
fewer people will have work and more will be out on the
streets.

I am sure there are places where this is true, but
there are also places its a "seller's" market and
the company only pays exactly what it has to pay
and not a penny more.

There's also something extremely disquieting
to anti-Communists about the idea of an entitled
wage. Too much government regulation to protect
citizens stifles corporate growth.

However, as we all know, while socialism is not
practical and tends to degrade to Stalinism, capitalism
is inhumane. We're always searching for the right
middle ground, and here is one of the battlefields.

Answer 5

It's a two edge sword when it comes to raising the wage.

1)You raise the wage, this means companies pay more for employees, but employees are able to meet ends. However this also means that the company no longer can employee as many people. This means that while those with jobs can meet ends, there will now be more people not able to since they won't be able to find a job, or get laid off.

2)You don't raise the wage, employees don't/barely meet ends, but the company is able to employ more employees. This means more people can have an income to provide a roof over their end, but that the employees struggle to keep even that.

As you see either way theres problems regardless of if you're for it or against it.

Answer 6

If the minimum wage was, lets say $10.50, the cost of a happy meal at McDonalds would probably be $7.50, the cost of your starbucks coffee would raise a buck or two. Minimum wage is a starting wage for high school and entry level positions. If your still receiving minimum wage when your in your 30s, it's probably your own fault.

Answer 7

To keep people working. Unemployment rates can rise if labor costs are too high. There are many companies in the US that are sending jobs to India and China for the cheaper labor. You must remain competitive to keep your job. Especially unskilled labor. Labor costs that are too high can also hurt business because of import competition from other countries. I don't think anyone disagrees with you regarding living wage. $7.50/hour is not enough. You need to find some marketable skills to command a higher price tag. Make money for the company. Go to school and there are many opportunities out there for you. U.S. is a free market. That is why it is healthy.

Answer 8

think about this: the wage goes up-fine dandy, however the employer now has to raise his prices to compensate. His next option is to cut employees hours and/or lay off his employees.
the raising of min. wage is a double edged sword
you ask anyone in min. wage jobs esp fast food. all employers
want to keep labor costs down. and they will do anything they have to to get it down and that means fewer workers or fewer hours. You watch, prices will go up across the board when min. wage goes up..
some small businesses really suffer from wage increases.

sucks for me too because i make minimum

Answer 9

Because minimum wage is "supposed" to be for high school and college students. Not for people who need to keep a roof over their heads or raise families.

I live in LA as well. Due to the high number of immigrant (NOT Mexican, but immigrant) employees, the wages are driven down due to competition.

This is on all levels, not just minimum wage.

Answer 10

If someone can't live within their means on minimum wage:

A. Get a better job
B. Get a second job
C. Create their own job.
D. Learn to live within their means.

My first job was at minimum wage. I lost it after 2 1/2 months because minimum wage went up and I was the last hired. Thanks minimum wage!