How does raising the minimum wage effect the US Economy?

Question

http://www.chron.com/disp/story.mpl/ap/politics/4834833.html

As you will see from the above article, the United States minimum wage will be increasing steadily over the next year or two. How will these increases impact the US economy? What should a recent college graduate expect with this raise? (No, I won't be making minimum wage at my first job out of school....at least I hope NOT). :)

Anyways when I go into an interview, should I use this as justification for in an increase in pay? (Salary negotiation)

Answer 1

It has a mixture of the following two effects:


1) higher inflation/prices

2) higher unemployment rate among low-skilled workers


This has been shown empirically a number of times.

Answer 2

The minimum wage hike will have no aggregate economic effect, because it is too small to be noticeable. Economists have been trying to find significant negative impacts from the minimum wage for years and it is just not a big deal. First, it effects only a relatively small number of workers, second, all those workers tend to spend their money right away (creating a bit of an expansionary effect), third, over the long run society adjusts to the change in wages.

As for the 'ratchet' effect, the last I heard that was not even true.

Answer 3

A change in the minimum wage changes the floor. For example if the minimum wage is $6.00 and I have been working at the job for a year and now make $7.00 I am ahead of entry level people. Now if the minimum goes to $7.50 I am making less than minimum and my employer will have to raise my salary to $8.50 or more if he wants to keep me. In turn it effects the price of all goods and services fueling inflation and driving the cost of everything you buy up.

Minimum wage is an entry level job not intended to be a career. I started at $1.65 and retired at almost $50 an hour. So I went from minimum wage to 7 or 8 times minimum wage in my working career. The way that is done is through education and you already have that working for you. Just look at the wages of entry level people with your education, don't pay any attention to minimum wage. If you did start at minimum I wouldn't expect you to stay there more than a month or two.

Answer 4

It depends on a different scale, some states for example like California and Georgia were real-estate is very much going up on value even the rent. It may not impact the US economy that much In the long run by the cost of living It could very well change the market.

Answer 5

Well - there is a corporation in the Speaker of the House's district who doesn't have to abide by it - TUNAGATE in the first 100 daze -

the corporation owns tuna plants in American Samoa - and they are exempted - and will only have to pay $3.30/hr

Thanks Nancy - you have removed our faith in the Dems

Want to really impact the economy? Support the Fair Tax!
HR 25 and S25 - it's time for another TEA PARTY!

Goodbye I R S!

700,000 people cannot be wrong
reduces 66,000 pages of IRS code to 136
and is so transparent, it can be described on a 3x5 card!

on my $26,000 salary - means an increase of 28+% in take home pay

talk about impacting the economy! Space Shuttle jump start!

Answer 6

It will raise the cost of everything else, so in reality, although the person will be making more money per paycheck, they will have to shell out more for rent, food and such, so in the end it all equals out to the same.

Answer 7

barbara C is correct