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Minimum Wage: More Good than Harm

Recently, the Obama administration has started to push for a raise in the minimum wage from $7.25 to $9.00, a $1.75 increase. This increase could do one of two things- substantially improve the lives of the minimum wage workers that will be affected by this increase or lower the incentive for businesses to hire employees and asking them to take a hit on their profits. I became fairly interested in this topic after I read a blog post on the Department of Labor’s blog. This post was about a roundtable discussion in Baltimore that told the stories of several different minimum wage workers. These workers work long weeks and still come up short for the necessities that them and their families require. Their stories opened my eyes to the everyday choices and struggles that these people must face because their wage is not high enough to support their family. Upon further research of this topic, I found some interesting statistics and numbers. “Nearly one-third of U.S. minimum wage workers last year were teens, and about 45 percent were 25 or older, according to Bureau of Labor Statistics data. Two-thirds of all minimum-wage workers were women.” (Dallas Morning News) In California, “About one in eight California workers – about 2 million people – earns $8.80 or less an hour. And the vast majority of those workers are adults rather than teens at an after-school or summer job.” (LA Daily News) This is definitely a problem because though the teens don’t need to pay for their necessities, there is a large number of people that are not getting paid enough to put food on the table.Image

Though it seems simple and reasonable to raise the minimum wage, there are some costs to this increase. Critics of this plan say that “ higher minimum wage would lead to higher unemployment among lower-wage workers.” (Dallas Morning News) This problem arises because employers are not willing to keep employing/hiring new people because the minimum wage is higher. This causes excess supply of workers, leaving the US in disequilibrium. To some businesses, the increase in wage isn’t really a problem because their wage is above the state set minimum wage. A good example of this is Costco. “Costco chief executive Craig Jelinek said recently that paying “good wages makes good sense” because it lowers employee turnover and increases productivity, saving money” (Dallas Morning News) To others, specifically restaurants and fast food chains, this change seems detrimental and would cause all sorts of problems. “Very few restaurant operators are big fans because there are very few ways to mitigate the impact of increased wages.” (Dallas Morning News) These businesses have very few options to work around this increase of wage. They can basically either raise their prices or cut labor hours, both of which many restaurants are very reluctant to do.Image

In my opinion, the benefits undoubtedly outweigh the costs in this situation. Although our economy has just seemed to get stable, there are many people in the US who still have to choose between food for their children or their electric bill because they’re getting $200 a week without taxes.


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