The minimum wage debate

There has been much debate and talk over the years about what the minimum wage rate should be set at. Our state of Minnesota is currently involved in raising the minimum wage from the current rate of $6.15 an hour to around $10 by 2015. President Obama wants to raise federal rate from $7.25 to $9.00 an hour. It is widely believed by some that by raising the minimum wage to these rates, low income workers will be better off and more able to support their families. But are these rate increases really going to help them and cause less hardship for their families?

If your going to raise the rate to $9.00 per hour, why stop there? Why not raise it to around 15 dollars per hour? After all, if you have a family to support and are only 9 bucks per hour, that still is way too little for anyone to get by on. If you live in a larger city like I do and expect to get by on 9 bucks on hour, you are sadly delusional. The point that I’m trying to make is any minimum wage job falls well short of being able to sufficiently support a family, at least in the long run. I have to laugh at politicians who think this will all of sudden solve the problem of poverty. The real solution is getting people off their butt and getting trained in a skill so they will not have to worry about making ends meet. There are many jobs out there for people who actually have the drive and desire to make money.

When I think of someone making minimum wage, I think of some young high school or college kid trying to make a few bucks for some spending money. In fact, studies have shown that most minimum wage earners come from fairly affluent homes and families. It is not often that you find some family trying to get by from working at McDonalds. This whole debate should really center around how it will affect those young people who may be priced out of job if the minimum wage rates keep going up.

From a business perspective, the rate increase could have some bad consequences of employment especially for young people just staring out. Suppose you are the owner of some small business and you have several young low wage workers on your payroll. Now you are being forced to bump up their pay by a couple of bucks an hour. It doesn’t take a rocket scientist to figure out that this may affect how many people the business hires or how many people they keep. If I own a business and have to pay some guy in my shipping department 2 more dollars an hour, why should I continue to keep him or hire additional help? I can pass those duties onto someone else and save some money. Most of the tasks of low wage earners are far from important anyways. Most do not have the skills necessary that makes them non-replaceable.

The argument that raising the minimum wage will help the economy is rather shaky. Sure if you all of sudden make a few extra bucks an hour, you will go out and spend it on more items. But are companies going to hire more low wage workers when they are forced to pay them 10 bucks an hour for sweeping a floor? I highly doubt it and this could greatly affect employment. Entry level positions and low wage job pay rates should be dictated by the market place, not some government official telling the business how much they should pay a worker. What about the rest of the workers in the business or company? I would think if someone all of sudden got a 2 dollar an hour pay raise, the rest of the workers would feel they are also due for a raise. And let’s not forget how this will affect the prices of the product that the company or business produces. Since labor costs are usually the biggest cost of a company, this will cause the product to probably increase in price and affect consumers as well.

In summary, it would be great if everyone could get good paying jobs to make ends meet. But jacking up the minimum wage rate is really only a band-aid solution to a bigger problem of getting people good and well paying jobs in this country. Unfortunately, the people who really get screwed on these rate increases are the young people of our country who would like to get their first job ever. I wish politicians would wake up and look at how this could affect business and young people in general.

 

 

 

 

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4 thoughts on “The minimum wage debate

  1. No one has an absolute right to own and operate a business especially a business that uses a model that intentionally exploits students, the aged and the unemployed whose high paying job was shipped overseas. Two of the worst business models that intentionally exploit their employees by paying low wages with no benefits are the retail and Restaurant industries. Any business model that cannot sustain itself without exploiting its employees while handing out millions of dollars in salary and bonuses to their CEO’s is not viable, does not deserve to survive and should in my view be shut down.

  2. I agree and unfortunately, there are many businesses and companies which operate that way. I cannot see how those companies can ultimately survive in the long run though. People who are taken advantage of will quickly leave and go somewhere else for higher wages. That kind of unstable work environment will eventually come back to hurt the company or business. The most successful businesses in my experiences have been the ones who have treated and compensated their employees fairly.

  3. Nursing homes, grocery stores, fast food restaurants – McDonalds etc. – retail industry – wal-mart – all make their money by exploiting their employees by paying low wages and as a result have a high turnover rate. They also pay their CEO’s millions of dollars and while the Walton family – wal-mart – is one of the richest families in America yet many of their non management employees are forced to apply for govt. assistance. Surely these companies can afford an increase in the minimum wage yet oppose it because it would impact the bonuses of their CEO’s and other higher ups. Nor are these companies in any danger of going out of business any time soon.

    This is why I support an increase in the minimum wage.

  4. Actually, one of Wal-mart’s CEO’s campaigned for an increase in the federal minimum wage last October.

    The industries that you mentioned, retail, fast food, restaurants all have employees who are part-time, young and very low skilled. In my opinion, those workers deserve low pay. Why should a company pay someone 12 bucks an hour to stock shelves or run a cash register? There is very little skill, training or education associated with those jobs. Just because a CEO makes a million dollars a year does not mean the company is entitled to pay some young employee a high wage. The wage is based on the market value of the employee. An average worker at Wal-mart makes nearly 9 dollars an hour, nearly 2 dollars above the federal minimum wage. I would hardly call that exploiting an employee.

    I believe bumping up the minimum wage by almost 2 bucks an hour will result in an increase in unemployment, especially for those workers under the age of 25. Many businesses simply cannot afford to pay low skilled and inexperienced workers a much higher wage. Young workers in particular will get priced out of a job.

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