One of today's news stories is that the federal minimum wage increases today to $7.25. Here's one of many links to this story: http://www.ajc.com/business/minimum-wage-hike-kicks-99639.html?cxntlid=homepage_tab_newstab The increase has been scheduled since 2007, and minimum wages are always open to economic debate. Do they help low income workers? Do they lead to layoffs and cut backs in hours? The simple analysis suggests that when the price of labor increases, the quantity supplied will increase. But as the price increases the quantity demanded will decrease, leading to a surplus of low-income labor and layoffs or firings. Then as the higher "bottom wage" increases other wages will have to rise as well, leading to more problems. The current discussion and projections from the government seem to suggest that the higher wages received (by those who are fortunate enough to keep their jobs) will generate so much additional revenue that consumer spending will increase, jobs will be created, and there will be little negative effects from this increase.
In fact, there are those in government already suggesting that the minimum wage needs to be raised and raised until it reaches the $10 per hour range. I wonder if this is a good time for such a move - there is still trouble on the unemployment front: http://www.google.com/hostednews/ap/article/ALeqM5iHJXWDtrvHB8s3w0SfjAJYB0ZVpQD99KA1OG0 This suggests that scheduling these increases to occur in the future without foreknowledge of economic conditions that will be in place is a risky way to pass laws. Who suspected in 2007 that we would be facing these economic conditions in 2009? If anyone did, they should have been able to profit handsomely!
Anybody directly affected by the increase? Did you get a raise? Did you get fired? Did your hours get cut? Too soon to tell? On a broader front, should we have a minimum wage law? Does the underground economy where people will work for less than the legal minimum tell us anything?
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Impeach President Trump, again
3 years ago
Personally, I'm opposed to the increase and to the minimum wage itself. Back when I was in high school my wage was pretty much dictated by the minimum wage. When it went up, my pay went up (that was years ago, though). But that's unrealistic, because I'm not contributing more value to the company at that increased level than I was before. I believe maximum efficiency can only be achieved when employers and employees have complete freedom to negotiate compensation, because only they know how much value the employee contributes and therefore what his share of the return should be (though it's rarely that straightforward).
ReplyDeleteThought you'd be interested in the way Newsy reported both the positives and negatives of this story: http://www.newsy.com/videos/the_cost_of_minimum_wage_hike
My personal opinion on the increase of minimum wage is a bit biased but i believe it has a right to be, I spent the past year of school waking up at 6:30 in the morning to go to a class not required by the state in order to recieve a certification that will allow me to perform a more specialized and more profitable work. What has happened in the past seven months in the economic world has narrowed employers candidates down exponentially because adults with families and mortgages are losing their higher paying jobs and being forced to apply for lower paying ones that teenagers and college students usually take. I have limited experience in both phlebotomy and the practice of pharmacology however 6+ months ago the piece of paper saying i am certified and qualified to perform both of those jobs was enough to get a job. Now every company save Walgreens who never hires any new techs is requiring a minimum of 6 months experience which nobody taking a certification will have. Even in the past month that six months has escalated to an astounding two years minimum experience to get a baseline job as either profession. As i said my bias comes from the fact that if minimum wage goes up exactly what you said is going to happen, people will begin losing their jobs and pushing the lower end wage earners out of theirs thus increasing unemployment.
ReplyDeleteZack - are there that many people out there with both certification and the experience requirement? I take it you're running into people who have been laid off from similar positions not people who are older and laid off from other professions and just trying to start in pharmacology. What effects do you think the possible health care reforms could have on those careers?
ReplyDeleteraising minimum wage helps absolutely nothing, there is a reason that the owners of businesses are the owners of businesses, there's a reason they're on top. They see a bottom line, they will not be screwed. If there bottom line cost goes up, they WILL find a way to push it back down whether that means firing someone, or cutting back on hours worked, or lowering the value of their product, they will continue to make the most money for themselves possible. It's like when the government raises business taxes, the owner simply raises his prices and passes that tax back on to the consumer. Raising the minimum wage simply kicks the little man while he's down. Pelosi is a moron.
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