Policy, politics, rhetoric…. All of these things sound great
on the outside but are in fact extremely complicated. There are economists and
people much smarter than the rest of us that can explain this in simpler terms
than I can. I will cover the pros and cons. If you don’t like what I have spent
20 minutes writing, then research your own (which everyone should anyways).
Ok. First I need to be clear that I wish people, in general,
didn’t suffer and provided for themselves. People need help with this, since
the last few generations did not teach such aspects to their children were left
with a different mentality. Second, I believe that people should provide for
themselves and be taught how to climb that economic “ladder” (gain higher
income as they progress through life). Third, I also believe that when you
start out at something, you need to start out small. Fourth, increasing the
wage would certainly help those that get hired but there will fewer or them
actually getting hired…leaving them unemployed.
Later on, their skills will increase, as they age. They not
only gain experience in that field of work but they also gain even more
valuable traits, such as discipline, work ethic, communication skills and other
technical skills (like computers, radio communication, faxing, tools, etc;)
which are invaluable for life and work, in general. If you start paying people
at a higher wage, without them gaining experience and skills first, they will
not progress. Also, as a business owner would NOT want to hire them for 12
bucks an hour, much less 9 dollars an hour, if they’re only 17 and are hardly a
benefit to your company.
Now let’s say that this 15-19 year old works at a low wage
for a few years during high school (at a retail store or wherever) and then
moves on with life after college for a career, they will have something great
on their resume: stable work experience and skills!
……….In short, raising minimum wage will benefit those
already hired and even less to be hired in the future. Businesses simply cannot
(or will not) afford to hire people (most cannot, especially now) who have a
low skill-set and a lack of experience, at a higher wage.
This is important…Minimum wage is not a “livable” because
that is not what it’s intended for. It’s a starting pay for those who have no
experience and no skills. However, those that DO get hired with this wage (who
have low skills and low education) will certainly benefit from the extra 100
bucks per month (that’s even if they enough hours). 7 dollars an hour for 20
hours a week for a whole month (with 23% tax rate with federal, state and SS
accounted) for would equal to $431.20 per month. Raising the minimum wage will
increase that to $554.40 per month, which would be pretty sweet if you were in
high school. Think of all the cell phone and car payments a young college
student could spend with that? LOL. Or
clothes, food, help parents out, etc; That’s over a hundred bucks per month,
which is pretty sweet, in my opinion (at that age). The problem is that the
business does not, and will never, see that the young high school/college
student’s labor actually worth that much.
**I must note that it is very unfortunate how many people
are on minimum wage because of their low skill set and low education….. and
even more unfortunate when they move out of their parent’s house, get a cell
phone and rack up debt from rent, utilities, etc; And it’s also bad when
someone has worked for most of their lives and gained a decent income, then
were laid off, and now can only get a job for minimum wage**
Now, having that extra few hundred bucks per month is GREAT
for the local economy. They have more spending money. The problem, once again,
is that the businesses in the area will simply not hire the majority of those
that have these low skills and less education.
Raising the minimum wage would certainly help people afford
more things but there would be fewer people who actually get hired as a result.
There is, however, a major problem with alleviating this
issue: poverty. Which is part of the goal with raising wages except that it
hardly works and in fact makes it worse for those with the low skills, etc;
Generalizing here, the millennial generation severely lacks
this. We want the entitlements, the paychecks, the benefits, perks, and we want
others to pay for them.
To put this in a perspective, we should look at some
extremes because simply would never happen. What if the minimum wage increased
to 17 dollars an hour. Would the mom and pop shops be able to hire a few
college-aged adults or high school students effectively? No. Especially if
their skills set is low. They could hire 3, if the minimum wage was below7
bucks an hours, though. Because they could increase their productivity having
three hands instead of just one (that’s clearly overpaid). Now, this is only an
example of an extreme in one tiny situation.
If you multiplied a less extreme example (from 7 to 9 bucks
an hour, and multiplied that by several millions of teenagers and young adults
(even older adults!) that are already looking for minimum wage jobs, then you
have a grand scale of unemployment.
Also, with the recent increase in corporate taxation,
healthcare taxation, payroll taxation, rich people tax (you know, the ones that
higher lower skilled people), taxation on dividends and capital gains, taxation
on business investments in general….its no ****ing wonder why businesses do
not, cannot and will not hire people (at least hire at a faster rate than they
are now).
Here are some links with pros and cons.
Cons:
1. http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html?pagewanted=all&_r=0 ßthis
article is excellent)
Both:
Peer-reviewed literature:
1. A little dated but still relevant: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2205309
(click on “Download This Paper” and you get the pdf format).
2. http://amstat.tandfonline.com/doi/abs/10.1198/jbes.2010.07076#.UdxyJPnvh8E (just an abstract)
3. http://www.sciencedirect.com/science/article/pii/S0047272712000606
(another abstract, but better)
4. http://www.sciencedirect.com/science/article/pii/S0047272711000703
(interesting case about fraud).
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