The Ineffectiveness of Raising Minimum Wage
By: Evan Ritchie
For several years now, a large population of workers in the US have been fighting for an increase in the minimum wage. The general consensus of low wage workers is that they would like to see a rise to $15 per hour. Currently, some states are beginning to take action. California has made the boldest move thus far as the first to officially approve a plan to increase minimum wage to $15 by 2022. New York is following these actions fast by requiring large food franchises to pay workers at least $15 per hour. Many people believe that an increase in minimum wage will help bring a large amount of citizens out of poverty. This type of increase would indeed be extremely significant as “40% of all [US] workers earn less than $15 an hour,” reports Ahiza Garcia of CNN. That is a huge percentage which means immediate impacts will be very extreme. When we look at the short run the impacts are very positive and promote growth of the economy. Due to the greatly increased incomes of such a large portion of the country there will be a major increase or positive shift in aggregate demand. People have more money and are now willing and able to buy more of the goods and services they want and need. This will also result in an increases in the Real Gross Domestic Product because the quantity being sold is increasing but price level is staying the same. However, basic economics tells us that a change in the consumer's income also affects how businesses change their prices. This being said, it can be expected that all prices of goods and services, in the states with increased wages, will also increase at the same rate. Another action business will be prone to take is cutting jobs. If cost of employing low wage workers goes up by 60%, it can be expected that roughly 60% of those workers may lose their jobs. This bears the question of whether or not it is an effective strategy to increase wage as a means to bring people out of poverty. 
In conclusion, it is important to think in terms of both the long and short run when making impactful economic changes. There are clear positives and negatives to increasing the minimum wage -- some come right away and others occur over time.
Works Cited
Garcia, Ahiza, and Jeanne Sahai. "What You Need to Know about the Minimum Wage." CNNMoney. Cable News Network, 1 Apr. 2016. Web. 12 Apr. 2016.
Sahadi, Jeanne, Jackie Wattles, and Chris Isidore. "California Is First State to Approve $15 Minimum Wage." CNNMoney. Cable News Network, 1 Apr. 2016. Web. 12 Apr. 2016.
Sahadi, Jeanne. "New York Seals Deal on $15 Minimum Fast-food Wage." CNNMoney. Cable News Network, 11 Sept. 2015. Web. 12 Apr. 2016.
Your post provided great details for both sides to the debate over raising the minimum wage. Like you stated, increasing the minimum wage will mean that many companies could be put out of business since they now have to pay more to their employees. Company owners will not benefit from this change. Some employees will benefit from this change since they will make a greater income, but some may not because of all of the job cuts that will have to take place, leaving them unemployed. Also, the majority of people who graduate college will make an hourly wage above $15 and their annual incomes will be greater. Minimum wage jobs should be meant for high school students just starting out. If the minimum wage increases, it may discourage people from going to college since they can make a decent living getting paid $15 an hour. Great article!
ReplyDeleteI agree the minimum wage should be increased, but I think $15 is extreme. Let's face it, people working at fast food restaurants generally are high schoolers or moms working part time. Fast food should not be a career choice. I am definitely for raising the wage of such occupations as health care workers or child care workers. Most of those people earn $9 an hour or less. So should we pay more money to people who half the time get my hamburger order wrong or to people who are caring for children or the elderly?? Also, there are some college educated people making $15 an hour. Does that mean, their wages should jump to $22 an hour??
ReplyDeleteAlthough it may seem like a benefit in the short run, I agree that raising the minimum wage could rise some harmful problems in the long run. Firstly, people are going to get paid more which can raise consumer spending, but this also means that the supply of money would have to increase in order to provide for the increased consumer spending taking place. If the the supply of money increases, the interest rates will go down, but could cause inflation because of how much more money is needed to satisfy consumer's needs. Overall, your topic was very interesting and I don't think that the minimum wage should be raised because there would be too many negatives opposed to positives.
ReplyDeleteRaising minimum wage may seem good at first, but it ain't. Especially not for the younger generation entering the job market. Businesses will be wary of hiring people who haven't had any job before vs. people with actual experience in life, just because they have to pay them more money. I agree there should be a slight increase, by maybe 50 cents? But to 10 or even 15 dollars? Nah
ReplyDeleteI agree, while people think it will be helpful to raise minimum wage it will only be helpful until all prices ride due to the increase of prices. Thinking about the people who already make over 15 dollars an hour, they would have a lower purchasing power and would be forced to buy less due to already having an income over this level. It will essentially not be beneficial for our economy and those who are making over 15 dollars an hour already. Also when thinking about minimum wage, I think about restaurants when servers only get about $2 for serving and how would the raise in minimum wage affect their incomes.
ReplyDeleteIt's interesting to see people's different opinion on what will happen with the minimum wage raise. My opinion is based on the evidence that you showed how the raise of wages will increase the cost of living at the same pace due to the aggregate demand. My question is what will happen to the people who are working jobs that pay $15, like EMTS for example. I don't think it is fair that minimum wage jobs like McDonalds are making the same pay for less work. In conclusion, the Increase in minimum wage is a bad idea in my opinion.
ReplyDeleteIt might seem like the right decision to raise minimum wage, but it will create many problems. It could result kids to turn away from college and work in fast food their whole lives because the pay is better and they might actually be able to support themselves on the pay. I thought your topic was interesting and you had good facts throughout your post.
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I like how you gave the pros AND cons to increasing the minimum wage. It makes sense that when you give more money to minimum wage workers, company's will either hire less people, or prices will go up, making the inflation rate go up. When inflation goes up, people are taxed more, and there is an overall decrease in purchasing power. Although raising the minimum wage seems like a good idea, because people will have more money to spend, I believe the negative effects in the long run out weigh the benefits. Because in the end, prices will simply rise and the ratio of goods and services to minimum wage incomes will be the same, just with higher numbers.
ReplyDeleteThis is very accurate. The short term effect will be very positive, but if everyone is given more money, prices of everything will increase because the dollar value will decrease. Inflation is a very real thing that can be good, but in small increments. Increasing minimum wage to $15 will significantly increase inflation.
ReplyDeleteFrom the things you stated in here, it is clear you did a lot of research. I completely agree here. Raising minimum wage will only provide artificial boosts to what people can buy. Eventually, everything will revert back to the original ratios. Those earning minimum wage will still feel as though they aren’t getting enough money. Plus, those workers who are earning $15 before the increase, which could have been enough for them, will now be suffering the same fate as those who got an increase. Basically, It will increase those who earn minimum wage and end up reducing everyone's purchasing power.
ReplyDeleteI think you made good points on both sides. But in the end, as the supply of money increases, so might the price of other goods and services. The demand for money will keep increasing as well because no one will be happy with what they have. Especially people who would just be getting into the work force. I also think it just depends on the type of job you will have. If you aren't happy with the money you receive now, then they should just try and find a different job that will pay more. Either way, I think minimum wage should stay were it is at and not raise.
ReplyDeleteI do believe that the minimum wage should be increased, but not to $15/hour. Although, as you said, it would impact the economy positively in the short term, it would harm the economy in the long term. Many people would lose jobs because the company owners wouldn't be able to pay all of their employees, or the company would have to go out of business as a whole. It would not be fair to certain individuals that work tougher jobs to be paid the same amount as a person who dumps frozen french fries into a pit of scalding hot oil. Good job, Evan.
ReplyDeleteBefore, I thought it would be better if minimum wage increased but after reading this piece i'm having second thoughts. Many people think that increasing wages will just bring people out of poverty but these people aren't looking ahead. If the minimum wage is increased to $15 an hour that would help at first but it would have effects on the economy. Businesses and stores and such would have to raise prices of goods because there's more money in the market, and when prices and money goes up things like inflation happen. So yeah having higher minimum wages could help some people but raising the amount to $15 an hour could eventually hurt the economy more than help it.
ReplyDeleteI can see how in the short run it could help us, but I don't see how it would help us in the long run. I agree with you that a lot of people that get increase in pay will result in a lot of people loosing jobs also. It would shift prices up on everything else and find a new equilibrium point. California and New York I feel will struggle with the change. People might make bad decisions because of their new wages, and it won't work out good for them.
ReplyDeleteAlthough there are a lot of benefits to raising minimum wage, I think that $15 may be a bit extreme. I understand that there are some people trying to raise families off of a minimum wage job, but in all honesty fast food jobs are for people learning about the work force and for high schoolers looking for a part time job to make some extra money; not for someone to raise a family off of. If you're going to have and raise a child you should have the means to do so and not have a minimum wage job in the first place. Increasing the minimum wage is not a terrible idea, but something as drastic as going from $7.25 to $15 is unrealistic. A lot of small businesses will lay off workers to keep profits up and prices of common goods and services will be raised, so based on how much you're spending it's almost as if you were making the same amount of money as before. Our country has a good, steady amount of inflation and a lot of economists believe that it should be somewhat higher than it is right now, so raising minimum wage would definitely contribute to raising the 1.3% inflation rate and help our country in that aspect. Overall good article, had a lot of good points and facts!
ReplyDeleteThis is a very good post. Companies will keep their margins where they are. If labor costs increase it will be made up for in cutting the number of laborers, cutting other costs, or increasing prices. All of which would have a negative impact on the long run economy.
ReplyDeleteExactly! For employee's wanting to increase their minimum wage, they're not thinking about what will happen long term. They are only thinking that $15 is much better than $7.25. But as you say Evan, the business will have to increase they're prices, or in other words, the workers are basically back into the same situation that they were in. In my point of view, it is worthless to try to increase the minimum wage because businesses will "correct" the problem and then prices of goods and services will be higher for the rest of the other non minimum wage workers. Anyways, good job on this blog post.
ReplyDeleteThe long term negative effects outweigh the short term benefits of raising the minimum wage. It's not worth the risk of potentially losing your job to get that big of an increase in pay. Yes, it would be nice if everyone were to make more money but that's just not the case because there are so many negative effects that would come from a raise in the minimum wage. Also with the prices of goods going up because people have more money to spend would put the people making the raised minimum wage back in the same boat because prices would rise and it would take more money to buy those goods.
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ReplyDeleteAlthough it may be appealing right away, increasing minimum wage would also increase unemployment by forcing these businesses to make layoffs in order to keep the business up. I don't think that minimum wage should be $15 considering that most jobs that pay minimum wage are low skill jobs that don't deserve it. Overall great post.
ReplyDeleteI totally agree it could bring a increase in wealth to people who are in need. But long term workers can be expendable and replaced with machines. Instead of a person taking your order maybe a touch screen takes your order instead. The flaws to rasing the wages greatly differs from the benefits. Prices will increase and consumer spending will drop due these price changes and fast food businesses will lose more and more customers due to this price change. In big population areas this $15 raise can probably work but expanding this to the whole country would be a train wreck with unbalanced consumer spending.
ReplyDeleteI hadn't even considered that the wage increases would be on many jobs that will eventually be replaced by machines. This increases the fact that this policy is ineffective. If were trying to increase wages of people who's jobs can be replaced, companies will only have more incentive to hurry that replacement. Ultimately, this will result in more job loss, putting more people into poverty.
DeleteRaising the minimum wage isn’t a good idea. Companies today would be more focused on profit rather than the happiness of their employees. Companies like MCD have made transitions to automated cashiers, and others are going to follow suit. Fast food jobs are like fast food, they’re good when it's a necessity but when you try to live off them it won't work so well. So while fast food jobs may be good for you in a bind or while you're in school they shouldn't be your career. Furthermore you should not demand more money that what police, firemen, EMS, and soldiers make. Unlike you they have an actual dangerous job, and therefore deserve to get payed more. A raise to a number of around 10 dollars seems more reasonable, but we as humans are greedy, and people will as want more. Although these people who are campaigning for the raise in minimum wage should be careful what they wish for. They might be looking for new job s that aren't there if they’re not careful.
ReplyDeleteI agree that the minimum wage should be raised a little, but the huge jump from $7.25 to $15 would cause a lot of problems. So many more people would be unemployed which would affect our economy. People need to consider that when and if they raise the minimum wage, if they will still have a job. People can make more money, but why would you want to work at a place that pays minimum wage for your salary? Minimum wage jobs aren’t meant for people that need to earn a salary off of it, or a full time job.
ReplyDeleteI agree with the statement provided that minimum wage should not be increased drastically. When people see that they'll be getting paid more, especially those at the current minimum wage, they see it as "now I'll have more money and will be able to live much better" However this is incorrect because sure the initial impact will be great because everyone will be getting paid more money, but as suggested in the post, businesses will compensate by increasing their prices on goods and services. As well as businesses might not be able to pay their employees for each of them would have a dramatic increase in pay wage if previously at minimum wage. Overall not affecting the economy in a positive manner.
ReplyDeleteIs this affective? I believe it isn’t. Yes it will help those who are making less than $15 an hour today but what about those that are already making $15 an hour and have been working hard to achieve that wage and deserve it. America is built on hard workers and those who sacrifice a lot just to get a head. America wasn’t just handed to our forefathers we had to fight for it and for a while. So why should those who don’t work hard deserve a $15 an hour wage. I think that if someone wants to get paid $15 plus then they should work harder and do something other than working at McDonald’s. People in the US have become so lazy that they expect money just to fall into their laps. More money should go to those who work hard, then those who are lazy can finally wake up and see if they want more money they need to work harder and in the end that will improve our economy in the US and make us the greatest country in the world again...because we have lost that title a long time ago.
ReplyDeleteRaising minimum wage in this country would do nothing but cause problems in the economy. Long term is what we need to think about in this case, not short term. Raising minimum wage is not the answer to our problems and that needs to be addressed immediately. Short term affects would be positive but only for a little bit before the cost of dollar changes and inflation occurs. We can't think about what's good for us now but what's good for our generation entering the new job field in the future. Overall, this was a well written piece that caught my interest.
ReplyDeleteWhile it is a fair argument as to whether or not the minimum wage should be raised, we sometimes forget the real reason people want to raise the minimum wage. The truth is many adults are being paid the same amount and taking the same jobs that us high school students work at. If you have a job you can clearly see how many adults trying to live on their own have the same job as you, and they have a lot more expenses than we do. Most of the time they're paid much higher than minimum wage, such as $10 or $11 an hour, and still struggle or are even unable to survive on their own. The majority of people I speak with that are against raising the minimum wage either don't have jobs or don't really converse with some of the adults working alongside them, hardly able to make a living. At least 3/4 of the adults at my job are paid $10-$12 an hour, and still work 1-2 other full-time jobs. The other 1/4 either live with their parents in their 20's/30's or live with a bunch of other people in a small apartment. While I agree that having everyone earn at least $15 is a bit unreasonable, it's still unfair to just say businesses can't afford it and a bunch of people would be laid off. If businesses raise prices because there's more available funds, than why would they lay people off? If you check the figures that small business owners make, you'll be astonished at how much it is. Most small businesses are owned by people who own multiple businesses as well, and large corporations make figures that you couldn't even dream of. Out of every single developed country, the US by far has the lowest minimum wage, the highest tax cuts for the wealthy, and the largest wealth gaps. That's not something to be proud of and is something that can easily be fixed. Changing the minimum wage isn't the only course of action a government can make to distribute the wealth, and no candidate who wants to raise the minimum wage hasn't already come up with solutions to the basic arguments that we present.
ReplyDeleteGreat topic to write about. It is true that the minimum wage should be at I believe $21.16 if it would have steadily increased. But it hasn't and unfortunately minimum wage is still stuck at $7.25 an hour. You make great points at how if the minimum wage were it increase it would bring more people out of poverty. But it could cause inflation, or even cause people to lose their jobs because so much money of the business are going to some people that there won't be enough money to have and continue the jobs of all the people in the building. Overall great topic and great points made.
ReplyDeleteIt is an interesting ultimatum to raise the minimum to 15 dollars an hour at the sacrifice of available jobs. If you really think about which of the two are worse, then one can say that laying off employees is worse. I don't see a reason to fire works at the cost of increasing income for works. I thinks so because I believe that having jobs available jobs to the most people as possible is more important.
ReplyDeleteI agree that minimum wage should not be risen. Sure people making minimum wage will benefit but it will only hurt the people making more than minimum wage. The money has to come from somewhere and it most likely will be coming out of the wealthier communities pocket. Most people that are well off have worked for it and I don't think it's fair for those people to be penalized. If people want to make more then minimum wage they should go back to school and get a degree. Also, if minimum wage were to increase the price of goods and services would also increase. Therefore, less people would buy the goods especially if they are not a necessity or elastic. Overall, I really liked your piece & thought it was well written.
ReplyDeleteI think another important factor to consider is who the workers are in minimum wage paying jobs. Although there are some exceptions, many minimum wage jobs are held by teenagers or people in college. So while increasing the wage rate to $15 is thought to increase consumer spending, it may also increase investments since teens can put away money for their futures. However, both situations effect GDP and therefore aggregate demand as well. As we have learned, an increase in aggregate demand results in a higher price level and a higher real GDP as long as aggregate supply is not shifting. However, increasing the minimum wage shifts the aggregate supply curve to the left because businesses have to pay their employees more as you mentioned. This post is very appropriate considering the presidential election that is coming up this November. It was interesting to read your perspective on the situation!
ReplyDeleteI agree with you that an increase in income would change prices of products across the board. But, an increase in minimum wage would have little to no effect on this. The only incomes that this change would have a great effect on would be part-time jobs. While it is true that many people do have part time jobs, this is mostly teenagers wanting a few bucks to put in their pocket. I believe that a higher minimum wage would have little to no effect on prices.
ReplyDeleteIf the minimum wage were to be replaced to a set higher amount, the long term negative aspects would out weight the short term positive aspects. I like how you described both the Pros and Cons of the change of minimum wage. If the wage would be approved it would lead to people getting laid out because companies would have to pay their workers more which would most likely lead to increased prices for their goods and services. With increased price it would lead to increase amount of tax and a decrease in the consumers purchasing power because of the increased prices. Either way this would affect the economy through the GDP, and since aggregate demand is affected by GDP and since aggregate demand affect price level, this would increase the overall price level of goods. Overall, the change of nearly double would negatively affect the economy and cause to many problems. The minimum could be raised in small increments but a large change like this wouldn't help the economy, instead it would hurt it.
ReplyDeleteI agree that the minimum wage should be increased but $15 is extremely ridiculous. If the minimum wage were to increase that much the prices of most goods and services would also increase. That would mean the minimum wage increase would mean basically nothing. Also, that is putting more money into the hands of some people that just do the bare minimum. These people are already taking money from others in the way of governmental benefits and this would allow them to get by by doing nothing for even longer.
ReplyDeleteEvan, this was an interesting article. I do not believe in a mandated federal wage. Like California and New York, it should be up to the states. The federal government should give back its power to the states and let the people of the state be responsible for their economic future.
ReplyDeleteI found your post to be very interesting and well written, and I agree with what you have to say. Personally, I believe that the people who are advocating for a boost in the minimum wage are more concerned with themselves instead of our entire economy and what the boost in the minimum wage will do to it. As you mentioned, the prices of goods and services would be forced increase, causing the value of our dollar to steadily decrease. For our US economy and even for our minimum wage workers, a boost in their earnings would do much more harm than good in the long run.
ReplyDeleteI argee that the prices of minimum wage should increase but 15$ is a little too much, due to the fact that then the price of goods would also increase therefore there won't be any change. Some people don't even deserve that much money because of the fact they do the bare minimum to just get a decent enough pay check. People who work harder and the most hours should get paid more.
ReplyDeleteMinimum wage should be increased but on a much smaller scale. Increasing it to $15 is too high and would raise the price of many goods that most people take for granted. It would also cause some companies to hire less employees so they can afford to pay for the more expensive labor. People presume that it's minimum wage that's the problem but it's people. These minimum wage jobs aren't for middle aged adults that need to support a family and the problem is too many people rely on them.
ReplyDeleteI like the topic choice and how relevant it is to this class, also I liked how you played a non bias role and presented the information without bashing the other right away. However, increasing the minimum wage would not solve the problem they are trying to solve and that is to bring people out of poverty, if anything it would make it worse than it already is. First of all, an increase of minimum wage would take away jobs and making things worse for the people that are poor, also prices would begin to climb as well so even if you are making more the cost of living would increase, and if you were one of those people that lost their job they wouldn’t be able to survive. Not only does it not make sense economically it is unethical because it is unfair for the people that worked and bettered themselves and got an education to get paid more. It is called minimum wage because it requires minimum intelligence/skill to do the job that you are asked to do, this income is not meant for people to live off of. So the best solution for everyone is to keep the minimum wage at $7.25.
ReplyDeleteThis is an interesting article and I love when we have discussions about, whether or not we should raise the minimum wage. First off, you did a nice job explaining it, and using very good vocab words in your essay. Second when talking about minimum wage I do believe we should raise it but $15 dollars is way to much and wouldn't benefit us at all. I think we should raise it to, I'd say about 8.25 or 8.50 would help benefit a lot of kids and young adults just starting off so that they can have a little bit more spending money and wont have to work extra just to get by. Lastly increasing the minimum wage to $15 dollars would just cause foods and other items to have their price increased and it wouldn't work out so I believe we should raise it just not to the point where it wont help anything
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