Minimun Wage increase-good or bad?

Question

With all the debate over the minimum wage increase, I have to know-do you think it's a good thing or a bad thing? Backup your reasoning with possible economic ramifications from either increasing the wage or leaving it alone. Most logical answer wins!!!!

Answer 1

It is alright for the less than 5% of the workforce making minimum wage and bad for everyone else. If you increase wages $1/hour from the federal minimum this is an increase of 20% in wages for those making minimum wage. This is pretty good if you make minimum wage as most employers pay their employees more. Consumer prices will only be modestly affected by an increase in minimum wage. Restaurants and bars is where you will see the greatest increase in prices.

If you are making $5.75 and the minimum wage goes up to $6.15, you will be making $6.15 and lose any pay increases you have received over the time you have worked. This kind of sucks for you. You will be making more money, but not really be gaining anything in terms of buying power. Also, you will be making the same as someone they just hired off the street.

Wages, like anything else are controlled by market forces. In many metropolitan areas, there are hardly no minimum wage earners (except servers, but they make tips so they really don't make the minimum wage). Try to get a job as a stocker at evil Wal-Mart, you will be paid $7.50-8.00/hour. Want to flip burgers at McD's, that is worth $8.50-9.00/hour. In many rural areas, where minimum wage is more common, small businesses cannot afford the increased cost of labor that an increase in the minimum wage would create. In rural areas the cost of living is much less than in cities, thus a higher wage is not necessary.

The main questions you have to ask yourself:

1. How many people are actually supporting a family while working a minimum wage job (or two) where they do not receive tips or any other form of compensation? The answer, very few. This argument is not a valid one.

2. How will this benefit those making minimum wage? Answer: Will have some benefit. Since most employers do not pay minimum wage, their prices will only be modestly affected.

3. Will this hurt wage earners not making minimum wage?
Answer: To a certain extent, yes. They will not experience the same increase in wages that minimum wage earners do. Also, their wages may be frozen (no increases) to help offset the cost of the increase in minimum wage (particularly in the restaurant industry). Their buying power will decrease as some consumer prices increase.


****EDIT****

To respond to another answer as I read through them. Increasing minimum wage with inflation may not be a terrible idea. It would give businesses a chance to plan and prepare for the increased expense and that increase would be a small one. Right now we sit at the same level for ten years and then increase wages 20% all at once. This can be hard for businesses who have a lot of minimum wage employees to prepare for.

Answer 2

Bad. Raising the minimum wage raises the cost of a business (ones that are already operating at small profit margins), to recoup these costs they would have to increase the price of their goods, this would affect the people that frequent these establishments (usually the minimum wage earners) making their cost of living go up more than the wage did, putting them into deeper poverty. Also realize that the minimum wage hike would only provide an increase in those that have been recently hired (since most people working at any minimum wage job get a raise in about 6 months) and would not help anyone that seriously needs it.

Answer 3

It's good for everyone. Minimum wage earners buy things! They spend all of their money always. This stimulates the economy, including for the wealthy.

A MW worker buys food at a restaurant. Restaurant owner gets money.

Compare this to the "trickle-down" concept and it becomes clearer. TD proponents believe that money given to the wealthy eventually "trickles down" to the poor and middle class.

However, what happens when the wealthy buy a Yacht in the Bahamas, and dock it in the Riviera? Nobody in America benefited at all.

Call a minimun wage increase, "trickle up". The Restaurant owner makes more profit, then they can afford that yacht!

Hope this helps.

Answer 4

A minimum wage increase will lead in higher inflation rates. Therefore the available wage will decrease. I think that increasing the minimum wage equally with the inflation rate is the best.

Answer 5

I'm of the personal opinion that minimum wage should be legislated to increase/decrease according to inflation/deflation, and give someone working on it full time a paycheck on the poverty line. If the 'minimum' is below the poverty line, we're living in a pretty sick world.

I'm not an economic genius...

Answer 6

I think it's bad. I believe in survival of the fittest, and I don't believe in public welfare to the extent we have now. These are my opinions, and I hope you defend my right to say them, as I will defend yours.

You raise minimum wage, and you raise prices a year later. You are always playing catchup with the inflation, and end up never reaching the carrot. All it does is devalue our money. If we got rid of illegals, Americans WOULD do the jobs they do, and would probably get paid more for it. Taxes would come in from those jobs, and it would help our country.

Ron Paul 08'

Answer 7

The logical but short answer is that only those who qualify for it do get it, and the economy benefits accordingly. It is a sad truth that some employers will exploit their younger workers unless the wider public interest, through legislation, prevents it.

Answer 8

It's a wash. When minimum wage is raised, prices go up. So where is the advantage?

Answer 9

Good for the workers, bad for small business's and consumers.

Answer 10

GOOD!

IF PEOPLE DIDN'T GET A RAISE EVERY ONCE IN A WHILE PEOPLE WOULD STILL BE MAKING A DOLLAR A DAY!

THEY'D HAVE TO WORK 3 DAYS TO BUY A GALLON OF MILK!!