Mr. Reuter
Economics B4
22 May, 2014
Minimum wage debate
Minimum wage was first started in the early 1930’s, to make sure that even the lowest paid worker would get a sufficient amount of pay. On June 24th, Congress initially set the wage to .25 cents an hour which amounted to about $3.80 in current dollars. Over the 60’s and 70’s Congress would gradually increase in minimum wage to what we have now, $7.25 per hour. And now that there is discussion of increasing the wage even more to $10.10, there is a big debate. Below is a picture indicating how much minimum wage has increased over the years. As you can see, inflation rate has also rapidly changed over the years.
Raising the minimum wage could be good and bad. For families, yes, it would be a great thing. It would put them above the poverty line by having more cash in hand. Not many families can live off a minimum wage of $7.25. By raising the wage to $10.10, it could be much better for families in order for them to have their inelastic products and maybe some elastic. Granted, more taxes would have to be paid, I believe it would be a positive externality for them. The family would be happy and it would be good for the economy too because they would be spending their pay within the community. By increasing the wage, the number of people living in poverty would decrease by 4.6 million. Doing this could also promote the earnings of those people at the 10th percentile by $1,700. As for the United States as a whole, an increase in minimum wage has great potential to do well.
For businesses though, there are definitely pros and cons. Employees may work better and harder if they know they are getting paid more. Proving that having a price increase, there will be an increase inquality also. But, it could cause the company to not hire as many people because they are spending so much on just one employee, they would also have to increase their prices too. This might also cause for job cuts. By doing so, the company can save money on training and by keeping the same few employees even if the company is running scarce of workers. Though, going up in prices could really destroy or boost a company. Whether it’s something people would be willing to pay more for or to not pay at all for.
Since companies would be forced to fire a lot of their employees, unemployment would drastically increase. The total amount of employment could be reduced to about 500,000 total jobs. By increasing the wage people wouldn’t be able to keep their jobs and common jobs would be scarce. That would be a negative externality for everyone else looking for a job because no one would be hiring.
In conclusion, maybe raising the minimum wage so high wouldn’t be the best thing for our economy. People would be losing their jobs and prices would increase. Even though it’s only a $2.85 price increase, it could do a lot of damage to businesses and people’s lives.
“The case for raising the minimum wage” By David Cooper, Web. 10 May 2013
http://www.usnews.com/opinion/articles/2013/05/10/raisingtheminimumwagewillreduce
incomeinequality
“Economist agree: Raising the minimum wage would reduce poverty.” By Mike Konczal,
Web. 4 January.
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/04/economistsagreeraising
theminimumwagereducespoverty/?tid=pm_business_pop
I agree, I think raising the minimum wage would not be the best decision for the economy. Even though the minimum wage is not keeping up with inflation, if we raised the wage inflation would still increase. I also agree with what you said about businesses. Companies would not want to hire new people if the minimum wage keeps increasing.
ReplyDeleteAlthough I can see how raising minimum wage might seem like a good idea, due to the fact that it creates a bigger flow of money in the economy, however I do not think raising minimum wage is a good way to fix the economy. If minimum wage is raised to 10.10 an hour most businesses will not be able to pay their workers that high of a salary thus some people might get laid of and unemployment raises will rise. In addition if the minimum wage rate is raised companies might choose to just raise the price of their goods and services in order to compensate for the workers higher pay. This will only result in higher inflation causing workers to not even benefit from their higher pay because they are using their extra money to pay more for their goods and services they need to keep their standard of living. However if workers were to reduce their standard of living, as in eating out less or not buying cable or other new technological devices, then I could see how raising minimum wage could help the economy. I highly doubt though that everyone across the nation is going to lower their standard of living.
ReplyDeleteLexi, I agree with you strongly that minimum wage shouldn’t be raised also. Like you mention earlier, it would only hurt business in the long run because they wouldn’t be able to afford their workers anymore. As a worker that earns minimum wage I would love to make an extra two dollars from my job but I know realistically that wouldn’t be possible because I would lose my job. I would much rather be paid minimum wage that be paid nothing at all.
ReplyDeleteRaising minimum wage is defiantly not the way to go. Everyone makes the argument that 7.25 isn't enough to support a family on. Maybe, if someone is supporting a family, they should get a job that pays more than 7.25. Since my dad is in control of hiring at the business he works for, i know how an increase in minimum wage would affect the company. As it is right now, there are barely enough people to get all the work done that needs to be done. An increase in minimum wage would force him to fire some people, which he really can't afford, no pun intended. What is needed is an increase in education so that people can get better jobs, not an increase in minimum wage.
ReplyDeleteRaising the minimum wage would do so much more harm than any good for our economy. We are already at a high point in unemployment and as you said, raising the wage would only increase that number. In no way, shape, or form could raising the minimum wage be beneficial to our country. Higher wages for workers means higher prices for the products which means more money spent by people. Therefore, especially since it's only minimum wage that's being discussed, those who are getting more money are only getting more money just to spend it all back as everything will even out just more expensively. Then, the middle and upper class people making more than that are just along for the ride unenthusiastically because now, everything costs them more and they didn't even have anything to do with the problem in the first place. If we raised the minimum wage, those receiving higher payments would only have it to spend it all back and those who are working for more just get sucked into having to spend more for every day goods.
ReplyDeleteI think that raising the minimum wage could be a good thing but it could also be a bad thing for the economy. It’s good for the people who will end up making more money but it’s bad for their business. This is because the places that raise their minimum wage will have to raise the prices of their goods and this will result in less business. It’s good for those people who are struggling in the economy and can only work at fast food restaurants. These people are usually not only supporting themselves but also families and they need all the money that they can get. I do believe that the business should come before the employees because without the business there can’t be employees
ReplyDeleteI really understand where you're coming from with this case of raising the minimum wage and the different scenarios that can come with it. The biggest one would be that that family's that can barely be supported will now be able to do more with this theory. And since we would be getting payed more I know for a fact some people would be working harder knowing they're getting paid more being more effective for the business as well, like me for example I would definitely be working harder for that extra $3 an hour. The inflation may rise however but since everyone is in poverty basically it wouldnt be that affective towards that I feel like. Very well put together source.
ReplyDeleteThis is always a good topic to discuss, I think if we kept minimum wage the same then it would be an incentive to work harder because the people will work for the raise. This way it is not just given to everyone. Then we wont have to fire as many people since the harder workers will make more and the average worker's will make minimum wage still.If we increase everyone's wages then nothing will change in relation to how hard people will work.
ReplyDeleteWhat this post reminds me of is what happened in Germany after the world war, mounds and mounds of cash was made to where it had more value as fire wood. So if the government keeps increasing the minimum wage limit we will put ourselves in that same situation, hope that make scene.
ReplyDeleteWhere do you expect to get the money from to support a raise in minimum wage. It means you have to raise prices and sacrifice customers to gain enough profit to maintain the same status as before the raise. If a company does not raise prices, they will have to lay off workers, resulting in a rise in unemployment. If someone is getting paid minimum wage, it is for a reason and there is no excuse. Anyone can go to college. Loans are easily accessible in most cases and if your financial situation is in bad shape, you can have nearly all of your college expenses paid for by the government and universities through financial aid.
ReplyDeleteIt is interesting to examine the effect that raising minimum wage would have on the overall economy and the individual impact. Like any other choice, there is a risk or consequence associated with raising minimum wage. However, there also could be benefits. For example, raising minimum wage could cause places to hire fewer workers, and there for high school and college age students would have fewer opportunities for a job. Contrary, raising minimum wage could help pull families out from below the poverty line. In this case the marginal cost, of decreasing the number of jobs, may be higher than the marginal benefit of increasing income. This could be because if there are fewer jobs, these people may lose their jobs and therefore have even less income. Overall raising minimum wage could be a dangerous decision.
ReplyDeleteIt is really interesting seeing how all of the people that earn minimum wage see the changes. I work and earn minimum wage but I believe that they should keep minimum wage lower. If they increase minimum wage they will shift employment down and force many companies to buy machines to take over. At the end of the day most of the people that earn minimum wage are kids that just want a job and really don't care to much about earning an additional 25 cents an hour. Good topic to write on.
ReplyDeletePeople in this day and economy don't understand, if we raise minimum wage then inflation will rise causing prices of all goods to go up. This would severely hurt the economy. Minimum wage workers should not be complaining also because they can change what they make by making a effort to get a new job instead of settling for a low minimum wage job. Employment will shift down but also the currency exchange of the dollar will decrease in value. Most minimum wage workers are kids, yet to those that are adults at a minimum wage job, you need to take initiative to find a better job and do something about your life, without making the whole world pay for your laziness or mistakes you may have made to put you in the position of a low paid job.
ReplyDeleteWhile I agree that the increasing the minimum wage would affect businesses and the way they operate, increasing the minimum wage would negatively affect families because as the companies now want to cut costs so they might opt to computerize their workforce as opposed to paying workers more. This would result in many workers losing their jobs, negatively affecting the families as it would cause a surge of structural unemployment.
ReplyDeleteI feel like the proposed minimum wage increase is a bit much. The employment decrease would effect people too much. I think that if we could increase the minimum wage only slightly, it would help low wage workers combat inflation, without sacrificing too many jobs.
ReplyDeleteIt is evident that in recent years the real value of the minimum wage has dropped as the graph revealed. Currently people can make more money on unemployment then they can working a minimum wage job. Clearly, the incentive function of the economy has failed as there is not reason for some to work. Raising the minimum wage, although it could harm small business, is a stimulus the economy needs to make working worth while for those who are unemployed.
ReplyDeleteThe minum wage being raised would have a huge impact on business with the minimum wage higher it would be more incentive for current business to switch to machines instead of the continued hiring of workers it would make getting a job more difficult because now that business have to pay more they are going to want to higher higher educated employes making it hard for teenagers and elderly to find a job.
ReplyDelete