GECON200-Topic #1: The Minimum Wage

In President Obama’s 2014 State of the Union address, he called for an increase in the national minimum wage from its current level of $7.25 to $10.10. The $2.85 increase would occur over the next three years at $0.95 steps, in addition to indexing the minimum wage to inflation. Currently, the minimum wage is only set at a nominal level and must be increased by Congress in order to increase. The general reasoning behind increasing the minimum wage is to help low-skilled parents of children earn a wage that can support their family.

The federal minimum wage was last increased from $5.85 on July 24, 2007. The minimum wage increased to $6.55 after one year, and finally rose to its current level $7.25 after two years. The increase in the minimum wage represented a 24% increase in the hourly wage for the lowest skilled laborers. Typically, economists assume that a full-time employee works about 2000 hours per year (40 hours a week, for 50 weeks). At full time, the minimum wage annual salary rose from $11,700 per year to $14,500 in just over two years. An increase in the minimum wage to $10.10 per hour would increase the annual salary by another 39% to approximately $20,200 per year. Assuming this increase were fully phased in by 2016, the minimum wage would have been increasing at approximately 3.8% per year in nominal terms. Linking the minimum wage to inflation would likely lead to additional increases of 2-3% per year assuming inflation remains at historic levels.

Notably, a wage of $20,200 per year just exceeds the current poverty level for a family of three. Often, this prototypical family of a single working adult with two children is touted as the main target of a minimum wage increase. But there are varying impacts of the minimum wage in different states, regions, and localitiesPeople tend to support minimum wage increases, because they sound like the right thing to do, but are they good policy? Economists tend to believe that the minimum wage is an inefficient tool at alleviating poverty, while the Earned Income Tax Credit is seen as a much more efficient tool. The goal of increasing the minimum wage is often said to be a poverty fighting tool, but the Congressional Budget Office recently reported that they estimated nearly 500,000 people would lose their jobs as a result of the increase. The Economic Policy Institute (video) supports the increase in the minimum wage for the reasons that they believe raising the floor would reduce poverty and bring it back to historic levels. The Economist discussed the President’s proposal from last year for a smaller wage increase, including the fact that many economists don’t believe raising the minimum wage would have much impact on unemployment.

Beginning in 1994, some cities and municipalities began enacting ordinances dubbed “living wages” that go above and beyond the national and state minimum wages. The living wage is estimated as the amount that it would take a family to meet a minimum “standard of living”. For example, in Harrisonburg City, the living wage is estimated to be about $8.52 per hour for a single adult, but $23.48 for a single adult with two children. In a more high-cost city like Arlington, VA, the comparable wages would be $13.22 and $29.40 per hour. For a single adult with two children, this would be more than $60,000 per year. Debating the basket of goods that falls into a “minimum standard of living” aside, few are suggesting that we set the minimum wage at $60,000 per year.

Furthermore, 21 states have increased the minimum wage above the federal rate. The fact that millions of people are earning wages that would be affected by a new higher federal minimum wage might not be the most efficient way to alleviate poverty, but should programs like the EITC continue to be increased? Would there be an improvement to overall well being given some other proposed assistance programs? Or is there some other path to reducing relative poverty in the U.S.? Employers might have a responsibility to pay higher wages, or it might just be good for business. For example, the Gap recently announced that they would be raising the minimum wage that they pay their own employees. So would it be better to wait to let employers raise their own wages? Or should the government take action?

Questions you might want to answer:

I would like you to think about the government’s role in the economy when it comes to the minimum wage. DO NOT try to answer all of these questions, just focus on one topic. Also, try to think about your comment from different angles. To write a brief comment, read the previous comments, compose your thought in a Word document, and paste it in the comment box below. The more original and factually supported your comment, the better your grade will be. Avoid anecdotal evidence including personal accounts. These emotional stories are often used in place of the general truth. Finally, your comment will appear ONLY AFTER IT IS APPROVED. Please don’t email me asking where it is, it often takes a while for me to get to it.

NOTE: Read other students comments before posting, and please leave your name with your posting.

I would like you to discuss some pros and cons of a minimum wage and/or living wage law in the context of one of the following questions, or one you made up on your own.

  • Can you find any examples of an employer paying the statutory minimum wage locally or in your hometown? What types of skills are they seeking?
  • What type of jobs are typically associated with minimum wage or near minimum wage pay, and why?
  • What incentives are created for employees already working at the minimum wage by raising the statutory wage as outlined above?
  • Who typically earns the minimum wage? Is it the family of three with a single working parent and two children?
  • Would increasing the minimum wage help a single working parent with two children to raise their family?
  • What might employers do if they were faced with minimum wage increases? Do you have any non-anecdotal evidence to support your claim?
  • Do employers have any responsibility to pay wages that their employees can live on?

49 thoughts on “GECON200-Topic #1: The Minimum Wage”

  1. While increasing the minimum wage might improve the lives of low-skilled workers in the U.S. in the short term, it will probably only make things worse in the long run. An increase of fewer than three dollars in wages may not seem like much it can be the difference between success and failure for some businesses. A lot of which include those which higher low skilled workers at minimum wage. As a result, employers faced with this increase will probably cut the number of workers they higher in order to make up the cost or they will cut back on the hours of their employees until their paying them the same they would at the lower minimum wage. Even back in 2007 with the minimum wage was just increased to $5.85 people were fighting it and small businesses sought tax cuts because the increase would cripple their business. Now at $10.10, the new minimum wage could be the cause of many lost jobs and even the closing of businesses. Reports are estimating a loss of 500,000 jobs because of this increase as a result of employers of minimum wage workers inability to handle it. Some of those in congress argue that the increase will also raise 900,000 families out of poverty but on the chance their plan backfires this could create an even wider gap between the lower and middle class families. Not to mention this increase in wages could also cause and increase in inflation, raising the cost of living and making the reason for the increase mute. From the past instances of this strategy, it is clear that this is not the right course of action. Rather, it would be more efficient to allocate funds to training low-skilled workers for jobs requiring higher skills and increasing jobs rather than just raising the minimum amount a company is allowed to pay per hour. Otherwise we will be seeing a lot of problems arising from those businesses that support low-skilled workers in the coming years.

  2. The ability to work at a fast food chain does not exist as a marketable trade on the same level as a blue collar worker with the ability to repair and install heating and air conditioning systems. The blue collar worker brings significant value to his business, the fast food worker is easily replaceable, and requires minimal training. Not only is the skill required of a minimum wage job not high enough to warrant higher wages, but the cost of even small incremental raises are a large burden on small and franchise businesses. Five workers making $7.25 an hour at standard working hours are a substantial cost to a small business which may barely make a profit every year. The cost of labor has to be made up either with increased prices, which will result in a decrease in business, or the termination of a position. This is something that most people simply do not understand. A great quote to sum this up is by William Dunkelberg, a contributor to Forbes magazine, “Firms cannot pay a worker more than the value the worker brings to the firm.” Increasing the wage of no-skill labor does not increase their output and profitability; therefore it is illogical for massive increases to the minimum wage without accompanying increases in the United States’ economic output.


  3. If faced with an increase of the minimum wage, employers will have an increase in their costs to actually run their business if they kept the same number of employees as in the past, therefore in order to reduce costs, they would actually end up hiring less workers, or potentially even firing some of these low waged workers. They would need to do this in order to keep their business going, because when a business can neither sell more products nor increase the prices of their goods, due to pressure from competing firms in their market, the cost cut has to come somewhere. Alternatively, employers could instead choose to purchase automated machinery instead of hiring additional employees, which would also cut costs and reduce employment.

    In addition to this, according to the CBO, while minimum wage workers would see an increase in the amount of money that they make every year, other people would see a general decrease in the amount that they made annually. This makes perfect sense, because while employers can cut the amount of employers that it has at minimum wage level, it still needs those underlings to run that part of the business. Therefore, other people who make above the minimum wage could see the amount of money that they are paid by their employers drop. However, the CBO also predicts a possible increase in the amount of money people would make as a result of the minimum wage increase, depending on how valuable that employee who already made above the current minimum wage was to the company. This prediction also makes sense, because if an employee is currently making higher than the minimum wage, but the new minimum wage is raised to what their current pay rate is, these employees are probably doing work that requires more skill than those working at the minim wage, and therefore their wages should also be raised accordingly. Although both options exist for employees to use when faced with this minimum wage increase, the CBO’s current research actually estimates that the wages would increase in general for those other employees currently making above minimum wage.

    The other outcome that has a high chance of occurring with the potential rise of the minim wage would be an increase in prices for goods and services. This would happen because the employers would again have to find a way to decrease their costs of their business, and as a result, some of that cost would be put on consumers with higher prices. However, according to the Scale Effect, this would result in similar effects of reducing the number of employees hired, because these higher prices would subsequently lead to less people purchasing these goods and services, thus lowering production, and reducing the number of employees needed at a company. Then, depending on how elastic that market is, this could actually result in a big hit to their business, as these firms would cut production more than others would have to.

    Thus as a result of an increase in the minimum wage, employers will face a choice between decreasing the number of employees they have, changing their business structure to incorporate more automated systems, altering current employee wages who do not make minimum wage, and raise prices. Most likely, employers will end up doing a combination of all of them if the minimum wage were to rise.

  4. As the government is deciding whether or not to increase minimum wage, they need to look at important factors such as the population that works at minimum wage, and also if increasing minimum wage would reduce poverty, based on where poverty stricken homes receive there income. As I studied these factors, I came to realize that increasing the minimum wage would not be a huge benefit to families living under the poverty line.
    First of all, studies show that it is not single parent adults who work in minimum wage jobs. Most minimum wage jobs are held by young workers who are still in school or older workers who have left school. Half of the workers in minimum wage jobs are between 16 and 24. 79% of workers in minimum wage jobs only work part time, 62% of workers in minimum wage jobs are enrolled in school during non-summer months and the average family income for them is $65,900 a year. This shows that it is not a single parent with two children working a full time minimum wage job, but it is most often high-school or college students who belong to an average income family. Even when looking at older adults working in minimum wage jobs, it is found that 75% of them live above the poverty line.
    Keeping these statistics in mind, we can now contemplate the idea that increasing minimum wage will reduce poverty. There are advocates of higher minimum wage jobs that argue that increasing the minimum wage will benefit low-income single parents and will close the gap between poverty and middle class. However, only 4% of people who work in minimum wage jobs are single parents who work full time, so minimum wage workers just do no fit the stereotype of single, full-time working parents. A higher minimum wage will not help poor families living below the poverty line, it will just increase the salary of young workers.
    This begs the questions, how to will help increase the income of low-income families? It turns out the low wages are not necessarily the problem, but work status is. Most poor Americans do not work for minimum wage because they do not work at all. Only 9% of poor Americans work full-time and year round, 25% work, but not full-time or year round and 67% do not work. This proves the point that increasing minimum wage will not benefit low-income families because 2/3 of them do no even work.
    Increasing minimum wage will not benefit low-income families because most minimum wage workers are between 16-24, 2/3 of minimum wage earners work just part time and 2/3 of low-income families do not work.

  5. If the minimum wage were to increase to $10.10 it would affect not only the workers but also the companies where they now have to pay more to their workers. Companies could have to increase their prices on their products, which then would result in Americans buying less of the goods and services. If companies have to pay more to their workers, then they may have to either cut down the amount of employees (buying firing and hiring less) and the employees would have harder in order to make the company more money due to the increase in spending the company would face if the minimum wage is to increase. As a result businesses could close due to the minimum wage increase.

    The jobs that are usually associated with minimum wage are either first entry or workers who have limited education and experience. The workers can come into a position at the bottom and can work their way up to earning more then minimum wage. The typical person who is earning minimum wage are usually young workers who are in school or have left school or older workers did not get a degree in school. Over then half of the people who earn minimum wage are in the age range 16 to 24. The people who do not increase in their position, which would also increase their pay either, lack motivation and/or skills.

    If the minimum wage were to be increased then the families for example a single mother of two, who now fall right above the poverty line would lose out on some of the government aided programs, such as food stamps, Medicaid, and other programs that help families under the poverty line survive. The increase would raise her to being disqualified for the federal benefits; another factor is with a higher pay roll more taxes would be taken out and less going directly to the family.

    Overall the increase in minimum wage would hurt companies, therefore hurting the employees. The increase would not help the families enough for them to benefit sufficiently, without some repercussions.

  6. As our economy progresses, it seems as though the government seems to be holding it back. Why? An increase an minimum wage may seem very nice short term given the poverty decrease that will be brought about, but it may be disastrous to businesses and workers in the near future.

    First off, the context of this increase is alarming. In 2007, minimum wage increased by 24 percent in two years. At this point, Congress is increasing it by nearly 40 percent over the span of 2-3 years from now. This is ridiculous, considering our economy shouldn’t be regressing. While there may be a justice for American workers by increasing the minimum wage, doing so would only make it harder for businesses and firms. Finally, inflation is very scary to think about. If inflation increases because of this, then the US, the most powerful country in the world, will have an economy in immense turmoil, especially because of the loss of workers in the force.

    In another study, the Federal Reserve Bank of Chicago found that for every dollar increase in the minimum wage, those households would increase spending by $800 annually. In terms of economic growth, all these gains would come from the interaction of income distribution with household savings, which may prove disastrous to those families in the long run. Also, labor is a complex market. Because most employers have substantial market power on their goods and services, the cost of labor, because of the minimum wage increasing, would most likely be placed on the goods and services to compensate.

    Locally, most places offer minimum wage to lower level skilled workers, most part time workers, or sometimes even entry-level positions in a field. Skills employers seek for these positions may include manual labor skills, service skills, and sales/retail skills, just to name a few. If the wage is increased, then by the time these skilled workers To better an alternative to this would be to train these low-skilled workers. This way, the work force will increase, minimum wage would stay put, and inflation wouldn’t be feared.


  7. Jobs associated with the minimum wage are the jobs that simply require the skill to clock in on time. They are targeted toward those who are unskilled in the labor force and can be disposed of and replaced easily. The current demand for these jobs reflects the necessity of certain individuals have for any form of an income, even it does provide a standard of living that falls below the poverty line. Currently, the minimum wage of $7.25 an hour would provide and estimated annual income of $14,500, which falls below the poverty line of most families. This leaves no incentive for people, usually young students, who are looking to merely supplement the income they receive from their families. The incentive of the single parents mentioned in the article is obvious; they need money to live. Raising the minimum wage could possibly be beneficial to people falling into this category, but one overlooked aspect is the inevitable increase in demand for menial jobs that this price floor would generate. The increased wage would present a larger incentive for young people looking to supplement their income, thus adding them to the current labor force and increasing the unemployment rate. The new demands for minimum wage jobs would create a shortage. Yes, those currently holding minimum wage jobs who are able to maintain their positions would benefit, but many people would lose their jobs due to firms unwilling to pay the higher wage. Not to mention the incoming younger and more able-bodied workforce that would be much more appealing to employers than a middle-age single mother. The verdict on the benefits of a minimum wage increase is almost evenly split. Though it would help many, its initial goal of raising people above the poverty line may be thwarted by the higher demand in jobs that it would cause.

  8. Employers do not have the responsibility to pay wages that their employees can live off of. Employers have the responsibility for themselves and for their own family. This article is really only focused on how the employees are affected by the minimum wage being what it is. What about the employers? Many small business owners are doing their best to stay in the profit and are just trying to stay afloat so they can support their family. According to OSHA (Occupational Safety and Health Association) an employer’s only responsibilities are to make sure that the employee is working in a safe and non-hazardous environment. Nowhere on the website does it say that they have to provide a wage their employees can live on. DOL (the Department of Labor) and the EEOC (Equal Employment Opportunity Committee) also do not state anywhere on their websites that employers have to provide a wage an employee can live on. Clearly the government feels that the employer has no responsibility in that matter as the owner. It is up to the government whether or not the employee can live off of their minimum wage job or not.


  9. Contrary to popular belief, increasing minimum wage should not cause a decrease in employment. It is thought that an increase in minimum wage should cause employers to enter recovery mode to minimalize labor costs (firing employees, selective hiring, lowering wages of other works, etc…). However, there is an irrefutable amount of evidence claiming just the opposite, increasing minimum wage will not reduce employment.
    After the analysis of data gathered by the Census Bureau found that sixty-six percent of low-wage workers are employed by large companies like Walmart or McDonalds.2 Because the majority of the minimum wage employees work for big companies like Walmart and McDonalds, it is unlikely they will be fired or have a harder time gaining employment from these companies because these large companies have such high profits they are able to afford higher wages.
    In addition, there are major retailers that already have minimum wages above $10.10, such as Costco at $11.50. Costco CEO Craig Jelinek explains that by producing higher minimum wage, it attracts better employees which in return produces greater sales.3
    Finally by raising the minimum wage, it boosts consumer spending, generating higher sales revenue for local businesses and promotes economic growth. The Economic Policy Institute claims that increasing minimum wage to $10.10 per hour, “would generate more than $30 billion in new economic activity and support the creation of 140,000 new full-time jobs as businesses expand to meet increased consumer demand.”4


  10. Do employers have any responsibility to pay wages that their employees can live on?
    This question largely depends on how long the employee is working. If an employee is full time, it would be much more difficult to get another job. If the employee cannot get another job to support themselves, the employer should pay them a wage they can live on. The opportunity cost of the employee to work full time somewhere where the pay is not livable is high. The employee can only work so many hours in a day, and stay alive. If an employee cannot make ends meet, racks up debt, and cannot pay it hurts the economy. Debt must be paid by somebody, it does not disappear. The employer would likely not see people staying in a job that does not pay enough to live on at full time. This will not benefit either party. An employer who must train new employees constantly loses money. Regardless of the reason, be it ethical, or practical, employers should pay a livable wage. Minimum wage is set to be a livable wage, but is not for every employee’s situation.
    Employers are not solely responsible, employers have only as much responsibility as necessary to make sure their employees who cannot work other jobs are making enough to live on. Minimum wage is set so that someone can support themselves and two children, as the article for the blog states. If this is true, then employers are doing as much as they have to. The government’s responsibility is to make sure this is maintained. Minimum wage will not be a livable wage for every situation, but there are a number of reasons why. If an employee making minimum wage is not fiscally responsible, minimum wage will not be livable.
    According to Forbes article written by Laura Shin, one woman who works for minimum wage cannot make it work. In her situation, she has four children. She works roughly 27 hours a week, but sometimes her hours are cut. She is on food stamps and rarely makes rent. If this woman were single, she would be able to make it work. There are many more stories like this, according to a NY Times article. Every person listed as an example in that article has to rely on other government programs or other people to help them. The idea of minimum wage is to help people support themselves and their children. Quite a few of the people listed on the NY Times article had more than two children, or other adults to support as well. This is why minimum wage is not a “living wage” for many people. The goal of minimum wage was meant to help people support two children and themselves. The reality is that many of the people working for minimum wage made fiscally irresponsible choices or had children without meaning to. These people should not be valued as less than anyone else, but it is not employers or the government’s job to pay for those mistakes.
    According to a CNN article written by Tami Luhby, a 1$ increase in minimum wage increases spending by 2,800$ a year in minimum wage households. 2,800$ a year is not enough to “get the economy going”. Sure, spending may increase that much, but is that money really enough to help businesses stay afloat? The same article explains that at even an increase to 9.80$ an hour meant that 467,500 positions would be lost. This number would seemingly impact the economy more than an increase of 4-5 thousand dollars in the economy. Increasing the minimum wage at this point in time seems to be irresponsible. In the same NY times article mentioned above, there were two more responsible employees who did make ends meet. They were not in an ideal situation, but they had jobs and were able to make do. Until no fiscally responsible person can reasonably live off the minimum wage it should stay the same or not be increased because of the potential job losses.

  11. Do employers have any responsibility to pay wages that their employees can live on?
    No, employers do not have the responsibility to pay wages that their employees can live on. Even if they have a full time job and cannot find another job to support themselves or their families with, the employer is not responsible for that. The cost of living is different everywhere you go. For example, someone with a job at a restaurant chain who has been there for two years should be getting paid the same as another employee of that business who works in a different location. Each are both equally qualified and have equal experience. It would be unethical to pay the employees different wages keeping all other circumstances equal except for location. Location of living is the choice of the employee and if the cost of living there is greater than what they are making, then a re-evaluation of their financial situation needs to take place. The employee would need to make sacrifices according to their lifestyle. Sacrifices may include moving to a different area, working more hours, or buying less wants to have more money for daily needs. By law, employers have to be fair and would need to pay all employees with the same qualifications and experience, an equal wage. Therefore, all employees would be receiving the wage of the “neediest” employee. The “neediest” employee would be the one that has the highest cost of living. Chances are the business would financially struggle to supply equally qualified employees, with equal wages.

  12. While the government is thinking about raising minimum wage, they need to observe the people who are currently receiving minimum wage. Yes, I understand that it will obviously help every minimum wage worker, however it will only make things worse in the long term. Employers will be losing money because they will have to pay their workers more.
    Just over half (50.6%) of the 3.55 million U.S workers who were at or below the federal minimum last year are between the ages of 16 and 24. I’m going to go ahead and say that most of this percentage of people are not single parents and are just working to make some money for school, and their personal expenses. However, an additional 20.3% are between the ages of 25 and 34. A majority of these people probably have families that they need to support; therefore raising the minimum wage would be extremely helpful for them.
    The types of jobs that are associated with minimum wage are the unskilled, part time jobs. In 2012, 1,555,000 workers that received minimum wage were in the food preparation and serving related industry, that is a million more then the next occupational group. The negatives of raising minimum wage to $10.10 is that it could be the cause of many workers losing their jobs, and even the cause of businesses failing.


  13. The argument in favor of increasing minimum wage sheds light on the important of the dynamic of a government relative to a company. While, the example of the Gap taking initiative and increasing minimum wage for its employees is profound, this scenario is unlikely to happen elsewhere. The Gap, just as many other publicly traded companies, must answer to shareholders, and I know if I held stock in the Gap I would not be happy with that decision. Businesses operate on the principle of maximizing profit and cutting cost, therefore they have no other incentive to raise wages for employees, especially if they already have their positions filled with people content making minimum wage. When the government raises the minimum wage, the shareholders will not be dissatisfied, because it was required to continue business. Seeing that most of our class, like myself, has worked for minimum wage shows that the people, even those who have graduated high school, do not have much bargaining power in the situation of obtaining an unskilled job. In our era where automation is becoming more widespread many seem to see a company offering them a job at all as doing them a favor, and the last thing they are going to do is try to bargain for higher pay. Who knows how long it will be before the cost of a machine that cooks and assembles sandwiches at McDonald’s will cost less than hiring employees at minimum wage?

  14. What might employers do if they were faced with minimum wage increases? Do you have any non-anecdotal evidence to support your claim?

    -Although the policy President Obama supports that would raise the minimum wage sounds great, it may not actually be. According to Forbes Magazine’s William Dunkelburg, increasing the minimum wage “is the kind of absurd thinking that leads to bad policy.” I have to agree with Dunkelburg. He claims that 60% of the poor don’t work because of bad circumstances in our economy already. This leads us to assume that jobs are very competitive between the poor. If the minimum wage were increased, even slightly, you would see unemployment rates rise. It may be slight but it will rise. People have to understand that labor is just like any other product, it costs something. The consumer (a.k.a. the Employer) has a demand for labor at a certain price. If labor costs more, the employer will hire less people. The value that workers bring to a company must equate to the amount of money they are paid. If they do not, then they are wasting the company’s money. That being said, with an increase in minimum wage, jobs will become harder and harder to acquire. Therefore, the policy that legislators intend to help the poor with, will in fact hurt them even further. An example of this was in July of 2009 when minimum wage was increased 10.6%. 6 months later 600,000 teen workers lost their jobs. When you raise the price of anything, people want less of it. This will force employers to fire workers and or be very specific about who they hire (consume). This will affect any unskilled worker. The Law of Demand does not lie.

    Who typically earns the minimum wage? Is it the family of three with a single working parent and two children?

    – Out of all the wages that will increase because of an increase in minimum wage, only 15% of it will go to the poor. Most minimum wage workers are actually not poor. In fact most come from minimum wage families (teens). The policy therefore would actually not help the people they want it to help.

  15. However good the government’s intentions may be in interfering with the economy to raise the federal minimum wage from $7.25 to $10.10 hourly, the wrong message is being sent to employees already working at minimum wage. Predictably, raising the minimum wage will lead to a severe backfire of unintended consequences. Although this idea is aimed at helping single parents support their families, previous classmates have stated that typically, these are not the people earning minimum wage. Instead, these people are often young or still in school. America’s minimum wage jobs should be seen as starting pointing points, rather than self-establishing careers. These minimum wage jobs teach the basics—show up on time, act appropriately in the work place. These skills can then be carried on into more demanding professions. According to a Forbes online article posted in August 2012, even college graduates are predicted to have 15-20 jobs throughout their lifetime. This data shows that employees are constantly seeking to make changes by means of improved salaries or benefits otherwise. The biggest problem with a higher minimum wage is that workers may have little to no incentive to set higher goals for themselves, going directly against the idea that our country was built on hard work. They may continue work at the same level of productivity because federal minimum wage requires higher pay, regardless. If many of the minimum wage employees lack motivation to pursue education and greater job opportunities, America will eventually see a decline in high skill related jobs.

  16. The Federal Government should not change the national minimum wage for a variety of reasons. For the most part, wages coincide with the amount of responsibility you’re taking on when performing your job duties. For instance, a heart surgeon is naturally going to have higher wages than a garbage collector. This is due to the fact that the heart surgeon is taking responsibility for someone’s life while the garbage collector has little depending on him. This being said, jobs that require more responsibility also require more education and training. At the local county pool, cashiers are paid the minimum wage of $7.25. However, if they undergo the training to become a lifeguard and take on the responsibility of guarding people’s lives, they receive an hourly raise of $1.00 making their wages $8.25. In addition, similar raises can be earned by employees by becoming certified to teach swim lessons or becoming a manager. Therefore, minimum wage jobs generally tend to require little education and minimal responsibility when compared to other positions that receive higher wages. However, if our government were to raise the minimum wage and make it more bearable for people with little education and little responsibility to get by, then this removes the incentives for getting a high school and college degree. For instance, why graduate high school if you can provide for yourself by dropping out of school freshmen year and getting a job flipping burgers? Like we learned in class, this would greatly increase the opportunity cost of going to college and getting a degree. After all, according to graph released by the US Bureau of Labor Statistics, 49% of minimum wage earners are already between the ages of 16-24.
    Finally, the purpose of a business (or most business excluding Amazon) is to make a profit. If businesses are forced to start paying employees more than before, this would decrease the profits of a business. Most likely, this would mean that said businesses would have to decrease the number of employees working for them in order to make the same profits as before, or more companies would have to start outsourcing to other countries where labor is less expensive. Either way, this would mean less jobs which means more unemployment, and therefore more hurting Americans. Instead of attempting to raise the national minimum wage, perhaps it would be better to simply have state and local governments raise minimum wages in areas with a high cost of living. After all, the cost of living in Harrisonburg isn’t anywhere near the cost of living in Washington DC. This would help the federal government better achieve their goals without having as many unpredicted kinks.


  17. Economists and others differ on the impact of a proposed minimum wage increase. The CBO and others site job losses and a negative effect on the economy. These conclusions contrast with those of 600 noted economists, including seven Nobel laureates, the Center for Economic and Policy Research, and other analysts that support the minimum wage increase, and conclude it would have a stimulative effect on the economy and have a positive effect or no effect on jobs (1.) One reason for the different conclusions is economic theory versus real world. Econ 101 says the market would react one way, but the real world is more complicated and has many “moving parts” operating at once that do not necessarily follow a single economic theory. The CBO study notes that there is uncertainty in its estimate and that “there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers”(2.) This range is quite large and should be considered when interpreting the results. Each estimate and statistical or economic model has uncertainty associated with the results, as evidenced by the different conclusions by economists about the effects of a minimum wage increase.
    Statistical and other analyses of past increases in the minimum wage find that there many mechanisms in which the higher wages have been absorbed by individual firms including “productivity increases, cuts in profits, reductions in earnings or higher earners, higher prices to consumers” as well as reduced staff turnover and training costs, and higher prices for goods and services(3). Some analysts suggest a combination of approaches is often used to offset a higher minimum wage without reducing employee hours or employment.
    The minimum wage is one area where government policy meets social policy. The Fair Labor Standards Act of 1938 (FLSA) set the first federal minimum wage at $0.25 per hour in order to stop abuses by employers. The FLSA set a “new legal attitude toward labor standards” (4) that has been debated and studied since its passage. Additional topics debated include the role of government, policy goals and regulatory responsibility of the state and federal government. The goals of 21 state legislatures that have set minimum wage levels above the federal minimum, including the 14 states that are considering additional increases this year, have adopted policies supporting a government role in labor standards, as have the 120 municipalities with living wage laws for businesses that receive contracts or subsidies for the local government (5) (3)(6).
    There are several observations that support a minimum wage increase: (1) the 1968 minimum wage, in 2013 dollars is $9.40 per hour, more than $2.00 above the current federal minimum wage, (2) years ago an employee earning the minimum wage was above the poverty line—but no more, (3) corporate profits and the S&P index are at an all-time high and are expected to continue increasing , according to Forbes Magazine (7), and (4) according to the CBO study the increase in wages for 16.5 million people and an end of poverty for 900,000(2).

    Works Cited

  18. Employers need to be held somewhat responsible for paying wages that their employees can live on because if their employees are struggling in their personal lives, it will show in their performance in the work force. If an employee needs to hold two or more jobs, has multiple children to feed, lives in a high priced city, or any other reason that we could possibly think of, then their money is not only be used to support them, but their family members. If an employee needs to hold two or more jobs just to make ends meet, then they probably have over exerted themselves, and this exhaustion can, and most likely will, lead to some pretty appalling, and in certain cases dangerous, performance from these individuals. Although employers should be held somewhat responsible for paying wages employees can live on, I think it is most important for the government to do something about this whole ordeal. We cannot solely rely on employers to pay higher wages because the principle idea behind a corporation or company is to profit, and if they are paying high wages to their employees, then the prices of their products will need to go up if they want to continue to make a profit, which will just keep this vicious cycle going. Increasing the minimum wage really will not do much; I think it is more important for the government to start subsidizing products that will allow Americans to live healthier lives, rather than subsidizing large corporations that just make the rich richer. Between the years of 2008-2011, “56 percent of the total tax subsidies went to just four industries: financial, utilities, telecommunications, and oil, gas & pipelines” (Romm 1). I am not saying these subsidies are not necessary, most subsidies are imperative to our living conditions, but if proper subsidies were added to healthy food sales and home prices, rather than to corporations that produce Twinkies, more American households would be able to afford proper nourishment, medical aid, housing, and other living necessities without any company needing to mess with the minimum wage.

  19. • Would increasing the minimum wage help a single working parent with two children to raise their family?

    Is raising the minimum wage in the United States from $7.25 to $10.10 the answer to our economic crisis? While it may seem like an instant cure to boost the economy and increase the quality of life for the minimum wage worker, there are many consequences that will occur as a result and ultimately it will cause more woes than cures, especially for the “single working parent with two children” that Obama mentioned.
    The raise in the hourly wage will cause an increase in unemployed workers. Small and large businesses will not be able to pay the same number of workers employed today with the increase minimum wage, which will cause layoffs and shrink the labor force. More workers will be applying for unemployment benefits which will in turn decrease the amount of dollars needed to infuse our economy.
    Our labor force is continuously being outsourced to countries like China, Taiwan, India, and Vietnam because they are able to pay their laborers at such a low wage rate as compared to the US wages. By raising the minimum wage it will be even more expensive to pay American workers, which makes them virtually unemployable and will only encourage businesses in the US to outsource their labor and thereby less jobs in America to offer to the already unemployed, like the single working parent.
    The increased minimum wage rate will also discourage the lower class workers to obtain a higher degree of knowledge. High school students are already dropping out of school for the $7.25 per hour instead of furthering their education. Raising the minimum wage will only encourage this behavior and entice more to follow suit. Because there will be reduction in available jobs overall, more educated people will be forced to consider the minimum wage positions as an interim solution if they are unemployed and thereby taking jobs the jobs that the less educated work force would normally be employed in. This will also increase our countries dependence on welfare and social services. Employers may also reduce the hours that a normally full time employee would receive in an effort to save on health benefits and full time employment benefits such as vacation, sick time and workmen’s compensation.
    Raising the minimum wage on paper appears to be a great way to boost the economy by paying the workers more money which they spend on goods and services. On the contrary it will negate any benefits to the economy and will have a negative impact on the single working parent’s income and the American Economy.

    Samuelson, Robert. “Raising The Minimum Wage – A Leg Up Or Job Killer?” Fort Worth Business Press 26.2 (2014): 29. Regional Business News. Web. 25 Feb. 2014.

    PR, Newswire. “Raising The Minimum Wage Will Hurt Job Creation, Say Researchers At Texas A&M.” PR Newswire US 01 Mar. 2013: Regional Business News. Web. 25 Feb. 2014.

  20. With rising prices and less jobs available, it can become difficult for a single parent to meet his or her family’s needs. However, if the minimum wage were to increase by $2.85, from $7.25 to $10.10, this would not only allow the parent to provide more for their family, but it would also help them get above the poverty level in the US. The idea behind increasing the wage is to give families a chance at earning a living wage. Why would you not want to give low income homes that opportunity?
    The Congressional Budget Office claimed that 500,000 jobs would be lost due to the increase of minimum wage, but according to Forbes Magazine, the increase in wage could cause no effect or up to one million jobs lost. Therefore, since the number of jobs lost is not concrete, this should not even be used as an objection to the wage increase. As of now, there is no explicit amount of jobs that will be lost, if any, due to the increase in minimum wage. Even if it rises to $10.10 an hour, the number of people that it would benefit (900,000) is almost double the number of people (500,000) that could possibly lose a job. Increasing the minimum wage will have a positive effect on single parent homes. There may be pros and cons to increasing it, but giving 900,000 families the opportunity to earn more money an hour is a decent outcome.

  21. Although there are many benefits that could come to improve the lives of those workers struggling under the current minimum wage, the drawbacks far out way the benefits. Minimum wage is set at such a low amount because it requires a minimum amount of skill in order to perform the job. Some of these jobs include being a cashier, washing dishes, waiting tables, etc. These jobs all require common skills that most people have. If businesses are forced to pay these individuals more to do less skilled jobs they will not be getting the benefit out of them with which they are putting forth in payment. Not everything in life is easy and should not be provided to people unless under certain circumstances. There will always be people who have had better luck or who have worked harder in their life and make more money. The ugly truth is that there will always be people struggling with poverty and then people who are drowning in wealth. The government will only cause inflation with this plan. Raising the minimum wage will result in the raising of everything else such as prices of all goods and services, salaries of other higher end jobs, and unemployment. It will increase the number of people looking for a job and decrease the number of people who are currently holding one, increasing the unemployment rate.

    The government already gives out a substantial amount of money in welfare, food stamps, WIC, etc. While raising the minimum wage might give some people on these government programs the incentive to find work and create more income, it will result in more people applying for help due to loss of employment. Businesses around the U.S will cut back on employees, increase efficient technology that eliminates the need for jobs, or raise their prices. By raising the prices, society will once again be making it harder on the American middle class for those who earn a salary pay. This is unfair because the working middle class who are more qualified for a higher income job either earned it through a college degree or harder work. If the government raises the minimum wage, society will be taking one step closer to a single class structure. The rich, like always, will be mostly unaffected while the middle class suffers and the poor move closer to becoming middle class. Raising the minimum wage by $2.85 is not a solution and will only result in an unintended consequence.

  22. The definition of “Business” is defined by Merriam-Webster as, “the activity of making, buying, or selling goods or providing services in exchange for money.” Furthermore it is “the amount of activity that is done by a store, company, factory, etc.”
    I would like to use these two definitions to prove a point. The point is that businesses are not concerned with morals and what is right, especially on the inner workings of their business. Instead they set out to increase their exchange of money and business activity. Yes, they want to have a good public view about their company, but other than that, the majority of “successful” businessmen don’t have morals on the top of their agenda. Trust me, I’ve worked for several of them. Upping the minimum wage to $10.10 sounded great to me! However after critically thinking about the impositions to such actions I disagree with the motion. All this will do is blowback and end up hurting those very same people our government sets out to help in the first place. Do you really think businesses are going to take such losses as $2.85 an hour? No. They are going to make up for it in many ways. They will cut hours, make employees work harder, cut benefits (employee store discounts, etc.) and make employees responsible for more jobs additional to their current position. If they don’t, they will either eventually go out of business, or they make little to no profit. That is obviously NOT good for the U.S. economy, and neither is it for our society’s minimum wage workers. While I would love to oblige and come up with a few opposing arguments for previous statements, I have to agree with the majority of my peers.


  23. We are living in an America where the average CEO makes roughly 209 times that of the average worker. It is easy for me and a lot of my peers to discredit the idea of a minimum wage increase. A lot of us will never have to work on minimum wage. But people forget that there are real people struggling with real problems. Obama’s recommended increase of minimum wage is meant to target the 0.8% of adults over the age of 25 who are struggling to live off of minimum wage. These are single mothers trying to raise children. These are people who never had the financial means or tools to be successful in college. These poor adults I’m referring to tend to raise poor children. The more poor children there are the higher crime rates tend to be. These 900,000 people that would be raised above the poverty line may be able to afford to send their child to college or even start a business now that they aren’t living paycheck to paycheck. Obama’s proposed minimum wage increase is all about bettering the quality of life for all of America. The next time you hear someone lecturing about how destructive a minimum wage increase would be, I urge to ask them how they would explain to their children how they can’t afford to put a meal on the table.

  24. The increase in minimum wage directly correlates to the discussions we have been having in class related to supply and demand. The demand for low skilled job positions is high right now because businesses are willing to pay $7.25, but the supply for these jobs are low because some people are unwilling to work for such low pay. If the minimum wage was to be increased, as president Obama suggests, the demand for new workers or the same quantity of workers would decrease because businesses no longer have the same willingness to employ unskilled workers at the new $10.10 wage. Two major side effects of the minimum wage increase are; laying off workers that are not essential to the success of the business or, in the case where most minimum wage employees are essential to the success of the business, increases in product prices as a result of higher labor cost of production. Although it may be hard to believe, there are some people out there who are content with being paid $7.25 but find themselves out of a job after the increase in minimum wage.
    A moral issue in regards to families living in poverty and single working mothers with children at home has been brought up, but does raising the minimum wage effectively solve this issue? No, studies have shown that most working age individuals that live in poverty do not work. There is no way that a minimum wage increase can help someone who does not have a minimum wage job, its as simple as that. Also according to the New York Times “a clear majority of those who do earn the minimum wage live in households that aren’t in poverty.”, this again proves that minimum wage is not directly impacting the proposed target.
    Currently there are businesses that pay more than minimum wage for jobs that have the same requirements as a common minimum wage job, this is done as a strategy for more supply of workers as needed. As an unskilled worker, there is more demand for jobs that pay higher than minimum wage which creates competition in the market. If the employers are forced to increase their pay the competition in the market will be reduced. Although I do not have an alternative solution to increase the wealth of the families living in poverty, I do know that a higher minimum wage will increase unemployment and raise income for the wrong people.

  25. Under the Fair Labor Standards Act (FLSA), the federal minimum wage for the United States is set at $7.25. This means a person who works at minimum wage will receive a yearly salary of about $12,064, excluding any breaks, vacations, and overtime. Jobs typically associated with minimum wage usually include jobs where employees can be easily replaced due to low-skill. Examples of low-skill jobs include fast food restaurants, retail, and custodian work.
    According to the article, ‘The Minimum Wage’, Obama called for an increase in the national minimum wage from $7.25 to $10.10 which would occur over the next three years. So, is raising the minimum necessarily a good idea? The Congressional Budget Office reported that as a result of the increase, an estimated amount of nearly 500,000 people would lose their jobs. Increasing the minimum wage, according to Drew Greenblatt (Marlin Steel), would cause more of a burden on employers. As a result, employers would employ less employees, leading to an increase in unemployment. Increases in unemployment is obviously a terrible thing, and shocks the economy’s growth. If more people are looking for work, less people will be buying, and therefore the retail sector will decline.
    The ‘living wage’ is the estimated amount it would take for a family to meet the minimum “standard of living”. With the current minimum wage, it would seem hard for a family to maintain the “standard of living”. This would, in theory, greatly benefit someone such as a single mother with two children. But, as I stated before, a raise in minimum wage could increase the unemployment rate. Although this increase in minimum wage would benefit a population, a select population would be in even worse shape than before.

  26. Society is constantly facing challenges of how to change living standards to become “equal” or “beneficial” to every working American. The cap of what to set minimum wage at is a prominent problem that we are facing today. Although there may be a few positive aspects to modifying the minimum wage rate to a higher dollar amount, there are many negative aspects to the proposal which are not beneficial to each working American. Most people who are working for minimum wage may believe that in increase in their wages will greatly impact their lives for the better. However, according to previous trends, nothing will change. Any worker who has been earning minimum wage has either just been making it, or has been struggling to make ends meet considering their situation. For some of these people, if they are able to keep their jobs, the wage increase will help. However, if employers need to pay their workers more, than it is going to cost them more to stay in business, so in reality it is going to make people lose their jobs which will increase poverty and reduce employment.
    The labor requested from workers who are payed minimum wage is nothing complicated or difficult; it is basic skills which most people are capable of doing. So, if the wage is increased and businesses can no longer afford to keep these people around, than they will have no problem letting them go- they aren’t necessarily losing anybody significant to the survival of the company. People in higher positions can fulfill their duties. Additionally, according to the Employment Policies Institute, past increases in minimum wage does not increase the Gross Domestic Product which in turn is not improving the economy.
    Generally, people who are working at minimum wage are young people. There are exceptions with the “single moms” or struggling families. So, if the wage was increased most of the people who it would be affected would be young people who do not necessarily need the money because they have no liabilities. In order to help the people who may have children or need more money than $7.25 an hour, it should be up to each business on a case by case basis. If these individuals can show that they are responsible workers, the business can make their wages higher- which is true in most cases. Instead of lowering the living standards in order to help poor individuals, they should show their bosses that they are capable of doing more than the jobs associated with minimum wage and should receive a raise. With the potential raise of minimum wage, the cons outweigh the pros. There are easier solutions which a business owner or a worker can do without needing to get the government involved and issuing a law which affects all of America.

  27. Jobs typically associated with minimum wage will most likely include low skill activities that most people can do. Fast food is what comes to mind when I hear minimum wage, no education needed and simple enough for just about anyone to accomplish. Having worked at minimum wage and reminiscing on the things I was asked to do, I don’t think that an increase in minimum wage is necessary. If the goal is to aid impoverished families in need of a helping hand, The EITC is a much better program for distributing that extra aid. Giving a single parent more money in the form of fewer taxes seems more logical than raising wages because of the decrease in jobs many firms would be able to offer given the extra inherent cost for each worker working below the new minimum wage that would have their wage increased. By increasing the benefits given by the EITC there is no new burden for employers to unquestionably shift on to the labor force (decrease in jobs offered.) However, it would still allow for lower class families, the target group for increased wages, to have a greater income, allowing them to better support their families. Minimum wage jobs are minimum wage jobs because it’s a great way to train people to develop into being good workers who show up on time clean and ready to work; they shouldn’t be a way to support your family. If you we want to aid lower class families we need to take less from them in the form of tax relief, instead of just paying them more money.,-Earned-Income-Tax-Credit,-Questions-and-Answers,-Maximum-Credit–Amounts-and-Tax-Law-Updates

  28. Although there are many benefits that could come to improve the lives of those workers struggling under the current minimum wage, the drawbacks far out way the benefits. Minimum wage is set at such a low amount because it requires a minimum amount of skill in order to perform the job. Some of these jobs include being a cashier, washing dishes, waiting tables, etc. These jobs all require common skills that most people have. If businesses are forced to pay these individuals more to do less skilled jobs they will not be getting the benefit out of them with which they are putting forth in payment. Not everything in life is easy and should not be provided to people unless under certain circumstances. There will always be people who have had better luck or who have worked harder in their life and make more money. The ugly truth is that there will always be people struggling with poverty and then people who are drowning in wealth. The government will only cause inflation with this plan. Raising the minimum wage will result in the raising of everything else such as prices of all goods and services, salaries of other higher end jobs, and unemployment. It will increase the number of people looking for a job and decrease the number of people who are currently holding one, increasing the unemployment rate.

    The government already gives out a substantial amount of money in welfare, food stamps, WIC, etc. While raising the minimum wage might give some people on these government programs the incentive to find work and create more income, it will result in more people applying for help due to loss of employment. Businesses around the U.S will cut back on employees, increase efficient technology that eliminates the need for jobs, or raise their prices. By raising the prices, society will once again be making it harder on the American middle class for those who earn a salary pay. This is unfair because the working middle class who are more qualified for a higher income job either earned it through a college degree or harder work. If the government raises the minimum wage, society will be taking one step closer to a single class structure. The rich, like always, will be mostly unaffected while the middle class suffers and the poor move closer to becoming middle class. Raising the minimum wage by $2.85 is not a solution and will only result in an unintended consequence.

  29. The government has the right intention with attempting to help lower class families support their families and take a step in the right direction, but raising the minimum wage to $10.10 across the board is not the answer. Small businesses would be the victim of the minimum wage increase the most. Small businesses represent 99.7% of employer firms in the country. They also pay half of the U.S private sector payroll. With the economy still recovering, small businesses play a key part in the process because they are a main component of the economy. Small business owners interviewed by the Wells Fargo/Gallup Small Business Index, claim that overall 45% of small-business owners believe that this minimum wage increase would result in a reduction of workforce, worker benefits, and capital spending. 74% of small business owners believe that they would be unable to hire more skilled or qualified workers due to funds being allocated to the base-pay increase. Most minimum wage jobs are offered by small businesses, which gives an inverse effect by targeting the business with the “low-skilled” employers. A large amount of the earnings directly pay for operating expenses, mortgage, supplies and employee wages and benefits. This lacks profit and with a new minimum wage burden, these small-businesses would only decrease what little profit is left. The growth of a small business can lead to the increase in profit, but with the minimum wage being significantly higher, these businesses do not have the chance to grow because of their newly allocated finances. Some small businesses can afford to increase minimum wage which helps the overall utility of the company by promoting happier and more dedicated employees, but for the small companies that struggle to rise to the new national standard, this could lead to budget cuts, an increase in unemployment and bankruptcy. Many minimum wage workers obtain jobs that are an easy task to complete which raises the question of why is there a need to increase pay $10.10 to a teenager with no experience, maturity or work ethic? There should be a national requirement of minimum wage so people aren’t getting paid change but the massive increase should be due to companies promotions or rewarding a worker for their hard work when the business can afford the increase of pay.

  30. Do employers have any responsibility to pay wages that their employees can live on?
    Minimum wage jobs are those that require little advanced skill, and mainly focuses on the employee’s ability to be on time and complete menial tasks. That being said, employers do not have any responsibility to their employees to provide wages that they can live off of. It is the responsibility of the employee to provide the employer with skills that reflect a certain wage. If the skills an employee possesses aren’t adequate to receive a higher wage, then it is the fault of the employee. Many minimum wage jobs are those that require an insignificant amount to no amount of skill, and as such, these employees are paid a wage that reflects that given skill set.
    All that being said, the people who usually work minimum wage jobs are people that have made irresponsible choices and found themselves unable to obtain jobs at a higher wage because they lack the skill sets required for those jobs. However, the choices that these people have made should not fall onto the employer. Regardless of how many children an employee has or how much debt they are in, the employer has no responsibility to raise a wage based upon the private life decisions of that employee. If two workers are equally skilled for the same job, but one has three kids and the other has none, the responsibility to earn a wage to support one’s self falls upon the employee. Special treatment, such as higher wages, would be unethical if the two employees are completing the same jobs in an equal manner. Therefore if one employee’s wage is raised because of their need to earn a livable wage, the wage of the second employee must be equal to the wage of the first. In turn, the employer would be losing money by paying higher wages based upon need rather than skill, and this could damage the business as it struggles to provide a livable wage for two equal employees (one of which, in this scenario, is earning more than a livable wage).
    In order for an employee to receive a wage that is acceptable to support themselves and their family (if they have one), they may have to consider getting a second job or moving to another area in which the cost of living is lower than the current area they reside in. It falls upon the employee to find a way to earn a livable wage, and if that means more hours, moving, or a second job, then the employee must determine which course of action to take. It is not the employer’s responsibility to ensure that every employee they hire is earning enough to make a substantial living. The only responsibility of the employer is to provide appropriate wages, as specified by the minimum wage requirement, and to only hire employees that are best suited for the position.

  31. “That’s a significant increase in the quality of life for our worst off that doesn’t require the government to tax and spend a single additional dollar.” This quote is from a recent Washington Post article regarding the current national minimum wage debate. The part regarding the government not requiring the tax rate or government spending in particular is interesting because it paints the raising of the minimum wage as a simple measure with no consequence. What stood out most to me, however, is the fact that that money has to come from somewhere. The government raising the minimum wage is certainly better for the government, but the difference between $7.25/hr and $10.10/hr would be a cost entirely placed on employers which seems like it would have some serious negative impact. The increase in costs for businesses would require one of two things to alleviate: either far higher revenues or a cutting of employees/employee hours. The problem with far higher revenues is that they can only come from increases in price or from more sales, both of which are very difficult to do in mid/post-recession 2014 when consumers are still watching their spending more carefully. On the other hand, the Congressional Budget Office predicted a loss of only 500,000 jobs, which is pretty minuscule compared to the amount it would help. That loss of jobs may also have benefit to society as the loss of unskilled labor to technology from the Industrial Revolution to present has continuously been for the greater good as it has made more advanced technologies and inventions from the computer to the automobile more affordable and has spawned entire industries.

  32. Raising the minimum wage is a two edged sword. Politicians often use this as a speaking point because when they say, “People will earn more” it sounds great, but it is looked at economically there are both good and bad sides. Before companies would have time to adjust to the new, required pay, two things would happen. The good side, of course, is the increase of workers’ wages, who tend to be less skilled so they are limited to the jobs they can acquire. On the other hand, a raise in the minimum wage would raise the price floor, thus taking the market for labor out of equilibrium, and resulting in a shortage of available jobs for those low skilled workers. Raising the minimum wage would make the competition much more intense, which could be good for the market but, for the lowest paying jobs and less people would be working. So basically if a person was lucky and kept their job they would be better off, if they are unlucky then they lose the previous wage and have no income at all.
    When the low skilled worker is voting on a politician that wants to raise minimum wage, they are actually raising the risk that they won’t be paid at all. That could mean that many of the jobs college students have, fast food, pizza delivery, retail, could all be gone because companies can’t afford so many workers. No real skill is needed for these jobs, that’s why companies could get rid of some works and the slack could easily be picked up by the other employees. I think a good way to raise the wage and both help those people it is meant to, is to hire on a “needs” basis. For example, those parents with children would be the first to be hired, then single adults, and then students and minors. If something like that is not done then the group the government is trying to help is being hurt the most because they need the jobs the most.

  33. Before recent talk of a higher minimum wage, the Obama administration promised jobs to people that desperately needed them. Unfortunately this has happened slower than expected and with new laws being proposed to increase minimum wage the chances of finding work will be even tougher, in fact more people could loose their jobs because business’ simply cannot afford to pay their work force $2.85 more. While that sounds like a minimal amount, imagine a company like Wal-Mart who employs thousands of workers, $2.85 times 1,000 equals $2,850. In this hypothetical situation a company like Wal-Mart would be paying $2,850 more just an hour, this number only gets bigger if you look at it over full work day let alone a year. All the sudden the low prices people in poorer social classes need would go up. The side affects of raising the minimum wage are risky, especially at a time when the economy is recovering, still, 7 years later.
    In recent years after hikes in the minimum wage one could arguably say poverty has grown in the United States as proposed by Chris McGreal on “TheGuardian.” The same argument has been waged for years and yet in 2014 the gap between the 1% and the rest of American citizens is greater than ever. The minimum wage did little to prevent this and could have possible caused this unfortunate situation. People that have been eligible to work might have been priced out of the market by wages that were not realistic by employers.
    The argument I would make is to lower or eliminate the minimum wage, even for just a few years. While the unemployment rate is at 6.6% (Scottrade), a high amount of people have completely stopped looking for work taking them out of the formula to calculate the statistic, as argued by many of my professors. What I am saying is that the unemployment rate is currently an illusion, making the current economic situation look better than it actually is. Would it not make sense to stop pricing thousands of people out of jobs and allow them to choose how much they valued their work? I am sure that people living in poverty on the streets would not mind earning $5 as apposed to nothing.

  34. While raising the minimum wage to hoist low-income families above the poverty line may seem like a noble cause, it may yield many unintentional and ineffective results. To start the basis of this argument, we must solidify that in a capitalist society, wages should be determined by the equilibrium of a labor market’s supply and demand curves, not by government intervention. That being said, minimum wages were never meant to support families. Minimum wages are meant for entry-level or unskilled workers. According to the US Bureau of Labor Statistics, the majority of minimum wage workers in 2012 were between the ages 16 and 19. Statistics show that teenagers are the most effected by minimum wages, not single parent families. Raising the minimum wage may also have other unintentional effects, like workers being fired.
    By mandating a wage increase, many firms will be forced to let go of their employees to compensate for higher spending costs. The Congressional Budget Office (CBO) estimates that the hike in minimum wage could cost over 500,000 jobs throughout the US. Less than a week ago, chairwoman of the Federal Reserve Janet Yellen testified in front of congress that she would not want to argue with the CBO’s employment assessment.
    Mandating a wage increase will also cause firms to increase the prices of their goods and services according to how much they have to pay their employees. Even though employees will have more money, goods and services will become more expensive for everyone. Families will still not meet living wages and the standard of living problem will still exist, except now everything will be inflated. If the government wants to help struggling single-parent families, they should look to more specific and efficient ways of stimulating the economy. This could mean giving families tax cuts or stimulus packages. While it is a noble intention to help out struggling single-parent families, raising the minimum wage for everyone is not the best means of doing so.


  35. In my opinion, increasing the minimum wage is a short term fix to a long term problem. Increasing the minimum wage is an easy way to attract votes as a politician and looks good on paper; however, it leads to problems such as reduction in labor force, higher prices in stores, and negligible benefits for those it is supposed to be “helping.” According to the Congressional Budget Office “if the minimum wage is raised the economy will lose roughly 500,000 jobs.” This is due to the fact that employers will have to compensate for increased wages by cutting back their labor force. Additionally, consumers could see an increase in prices because businesses will not accept hits to their bottom line and therefore pass on the increased cost of labor to the consumer. Lastly, by increasing the minimum wage, the federal government is playing with a double edged sword because raising the minimum wage could cause people who rely upon food stamps and other income dependent services to lose these benefits as they are pushed over the income threshold for this federal aid.

    I believe the reactions of employers to a minimum wage increase show how damaging this law would be to our economy as whole. For example let’s take a look at a recent case of an employer responding to the threat of a minimum wage increase in D.C within the past year. Walmart, one of the most iconic brands in our country was planning to move into the D.C market with 6 stores. After beginning construction, the D.C council put forward a “living wage law” of $12.50/hr which would only apply to big box stores like the new company in town, Walmart. In response to this Walmart threatened to leave the market and cancel construction of the 6 stores that were already in motion to be completed. Fortunately, the mayor of D.C vetoed this legislation which kept Walmart in D.C; however, the response by Walmart to legislation like this shows how harmful “living wage” legislation can be to our economy. If D.C had passed this legislation they would have missed out on 6 stores that employ thousands of people. This example is evidence that employers will simply cut back rather than employ the same amount of people at an increased wage. I believe the benefits of the jobs that companies provide outweigh the potential benefits of raising the wages of those employed in entry level positions. It simply hurts the economy in the long run to entertain the idea of increasing the minimum wage.

    Michael Love

  36. Economics is a science on how to achieve equilibrium (QD=QS). While looking at minimum wage, if it was to be raised to $10.10 an hour, employers would not want to want to pay their workers these salaries and farther down the road equilibrium will not be met. If the government increases the price floor (the price producers cannot pay below) quantity demanded (of jobs) is going to be much greater than quantity supplied. Business could then raise prices to offset the wage increase, leading to less consumption, less output, and less growth.
    As stated in the NY Times article offered in the reading, an estimated 500,000 people would lose their jobs if Obama’s plan of raising the minimum wage went into effect. As a result, the EITC and other welfare programs are going to increase government expenditures. If you consider the people who work minimum welfare jobs (usually young, uneducated, foreign, less wealthy growing up, etc.) they are living in low income housing. Because of their backgrounds with limited opportunities they are usually doing these such unskilled jobs. These jobs are sometimes deemed unnecessary; and in those cases companies will end up getting rid of large amounts of employees as a result. By getting all these people fired you would in turn be hurting the people you were initially trying to help in the first place by raising the minimum wage.

    I agree that the government should deal with inflation and the minimum wage at some point, however, the nearly 33% (mid-point formula ($7.25+$10.10)/2=8.68 then 2.85/8.68=33%) raise in the minimum wage would surprise employers and put them in a bad financial place, leading to the loss of too many jobs for the raise of the minimum wage to be marginally beneficial. The jump to $10.10 an hour is in my opinion too rapid of a change and should be approached in a lighter way. If the government was to gradually increase the minimum wage at a slower pace it would put companies on a much better ground financially in paying salaries out to their workers.

  37. The move to increase minimum wage to $10.10 an hour would raise many people in America above the poverty line and improve their lives. With the current minimum wage at $7.25 an hour, a family with two kids lives below the poverty line. As a wealthy industrialized nation, this is unacceptable. It is also hard to definitively say that the new minimum wage will negatively impact jobs. Research conducted by Arindrajit Dube, William Lester, and Michael Rich showed that there was no negative impact on jobs in counties in the United States where the minimum wage rose.

    The increase in the minimum wage will also help people and families deal with increase in payroll taxes and less government aid. It will also allow for more purchasing power in these lower income families. There will be less sacrifice and more ability to pay for things that are needed, such as food and bills. People will also be able to borrow more because of the $250 more per quarter for every $1 increase, according to the Federal Reserve Bank of Chicago.

  38. The types of jobs that are usually associated with a minimum wage paying job are those that do not require very many skills or a college degree in most circumstances. As stated in pew research, the top categories for minimum wage jobs are 51% in leisure and hospitality industry, 16% in retail, 9% in education and health services, and the rest are scattered among different sectors. There are a couple of reasons that this spectrum of minimum wage jobs may occur. For one, in many of the leisure and hospitality careers, ie. Hotel maids, people working in fast food restaurants, ect. is because many of these jobs do not require very much skill. They are relatively straight forward and do not require too much training to perform. In today’s world, generally the more education you go through the higher your salary. This is because these people have more skills and can perform tasks that are harder and take more critical thinking. Also work equals pay, in this world you have to work your way to the top, and that means that generally, the harder you work the more money you will probably make in the future. That’s why you see the trend of many minimum wage jobs not requiring a college education, or work for that matter. There is a pro to this though, not everyone is alike, and college is not meant for everyone. These types of jobs make it so that people who don’t have the higher education or training can be employed and have the opportunity to make a living and provide for themselves.
    To many people as stated in the article read before this discussion think that a higher minimum wage tends to mean less people in poverty and more families living above the poverty line. In many cases this is true, but what a lot of people don’t take into consideration is the fact that many companies have a minimum they are willing to pay to their employees as a whole. In other words a set amount of money they are willing to use for salaries; and if you raise the minimum wage, that won’t cause more people to live above the poverty line; it will mean more people will lose their jobs, or in many cases the number of jobs will deplete. As stated in the article by pew research, “the controversy over Washington, D.C.’s living wage ordinance, which will prompt Wal-Mart to pull out of as many as six new stores planned for the city, has drawn new attention to those near the bottom of the nation’s wage ladder.” In that case it is causing jobs to disappear, which is not solving the problem of poverty, it is contributing to it. Now I know that the wage ordinance is not the minimum wage law, but it serves to show the same affect, and actually, the wage ordinance is only to raise the wage paid to non-union retailers to pay workers in the district $8.25. This is almost 2 dollars less than the proposed minimum wage. Personally, I think we need to draw a line at where we can maintain the most jobs while paying the most in minimum wage, and $10.10 will be too high for that limit. Long term it is going to hurt those in the lower class much more than it is going to help them, so it will defeat the purpose they have for raising the wage.
    Nathan Stillman

  39. The minimum wage should be increased for a few reasons. First off a raise in the minimum wage would ultimately prove to be beneficial not only for the employees that will be earning these higher salaries but it will also be beneficial for the businesses paying these salaries. This is due to the theory of trickle up/fountain economics, where consumers with their new higher incomes can now put more money back into the economy. An article from the Economist, titled Trickle-up economics argues, “That a higher minimum wage boosts jobs by shifting income towards people who consume more of what they earn.” This helps demonstrate that consumers will be willing to spend more if they have more to spend.
    Another main reason to raise the minimum wage is because it is just frankly not enough to provide for a reasonable quality of life. The U.S department of Health and Human Services states that the poverty line for just 2 individuals in a house hold is $15,510 salary a year and the minimum wage only supplies a $15,080 salary a year for someone working an average 40 hour week. This means that a single parent cannot support even one child on the minimum wage salary and would be forced to rely on government aid. For this reason the minimum wage should be raised to an appropriate level.

    “Trickle-up Economics.” The Economist. The Economist Newspaper, 16 Feb. 2013. Web. 02 Mar. 2014.

    “2013 Poverty Guidelines.” ASPE. N.p., n.d. Web. 02 Mar. 2014.

  40. Although poverty is still rampant in America, a raise in the minimum wage may not be the best solution for working parents struggling to make ends meet. With almost 1 in 5 children being born into poverty today the war on poverty that was so popular in the 60’s may be returning. The idea of raising wages sounds like a no-brainer, but the residual effects may not reach its target. Of the workers in America working at hourly wage jobs, one-fifth are under the age of 25, and half of those workers are working at the federal minimum wage of $7.25 per hour. The raise from $7.25 to $10.10 may be a big jump to the demographic just mentioned, but to a working mother with two children, the benefits are marginal. Even with some high school experience only about 5.9% are being paid at minimum wage, and among high school graduates that percentage shrinks to 1.5%. The argument to be made is that a raise in the minimum wage as suggested by President Obama would not benefit a large part of the population, and it most likely would not benefit single parents as much as other alternatives may.
    The solution needs to begin with education. As per the same data above, only .4% of college graduates working at an hourly wage job make $7.25 per hour. Education is directly related to working wages. Instead of raising the minimum wage, Congress should look more into easing the burden of costs associated with higher education, as well as providing incentives to students to graduate high school.


  41. Can you find any examples of an employer paying the statutory minimum wage locally or in your hometown? What types of skills are they seeking?
    In my hometown,,which is Shanghai,China.At there we are quite differently with U.S.A.First of all,I have to say we do have the minium wage in many areas.Also,the theory of that statute also because of the average living standard in each city.For example,in Shanghai,our minium is pay by monthly but not like hourly wage here.The wage approximately 1850 yuan which is 310 U.S in 2013. dollars.Also the tax already paid when you hand in 310 cash.That is the basic information about my hometown.So how can they find out the minium wage in Shanghai?There are nine major impacts :
    1)Average income 2)Consumer Price Index 3)GDP per capital 4) Average personal support of the population 5) The average per capita consumption expenditure 6) Low income earners spending 7) Lowest income households spending 8) Per capita subsistence minimum 9) unemployment rate
    From those elements,I will talk about some of them,the average living standard is the frist angle.(That including 1) 2) 3) 5) 6))In China,we have the on child policy and both parents have the job.So I suppose family of three and two of them have the jobs.And combine with the average personal support of the population.The annual living standard (not including the mortgage and other monthly payment) is around 3000 yuan(500 us dollars).So from that angle,even you at the lowest wage level,you still could living in Shanghai.The another angle will Industrial Structure.The biggest industry right now in Shanghai is real estate,so that decide we need many basic workers.Normally those workers from other part of China,so the company will pay for the place to living for them.What they get every month is the money they actual owned.The big population,we also called population benefit in Shanghai(over 20 million) lead many basic services working opportunities.(That including 7,8 and 9 each of those elements).According to this huge population,the minium wage can not be to high.The unemployment rate is also important,now we are in very fast developing period,that cause each spot need workers.But also influence by the big population,the rate is around 5% in 2013.As the conclusion,combine all those elements are the min wage in Shanghai ,China.

    Hang Zhang

  42. The biggest debate that has recently reached the White House and has carried much backing by Democrats is the idea of raising the minimum wage from $7.25 to $10.10 in a matter of three years. “The U.S. government has had a minimum wage since 1938, and it has been raised close to 30 times, but when adjusted for inflation, it peaked in 1968.” Everyone knows and has stated the 500 and 900 thousand statistics by the Congressional Budget Office that are projected by 2016, but who really are attaining the benefits of this wage increase? My source recognizes that nearly half of workers earning minimum wage or below are between the ages of 16 and 24. Also, from the Labor Department, nearly 3.6 million Americans were paid $7.25 an hour or less in 2012. Most of these people that are earning minimum wage work in jobs such as food preparation and other service-related fields. Some would be very skeptical of this increase due to the quality of the workers who are working for this minimum wage. On the other hand, people are willing to see what this increase will do to bring many of those out of poverty to help create a lifestyle they can raise a family with. These two different sides are what bring up this whole debate.
    I would like to see what will come about with this gradual increase of the minimum wage over a three year period. An estimated 16.5 million workers can possibly benefit from this increase of the wage. With this many people being involved in this idea, it has to be taken very seriously and looked at from many different viewpoints. Another viewpoint is from the owner’s standpoint or whichever person is doing the hiring for the company you choose to work for. Are owners going to still hire the same kinds of candidates and people from different backgrounds for these jobs or are they going to take new steps into carefully picking who they want to receive these newer higher wages for these positions? High school graduates and college students might not be able to get some of these jobs as easily as they had before if the wage were to increase. Some owners might want someone with more experience or even more maturity to be taking a position with more money involved with their company now. As Erin Calvo-Bacci, owner of a candy maker store in Massachusetts says in my source, “I’m not looking to hire people with absolutely no experience at such a high cost.” This is just one example of what could possibly occur in reference to hiring with a higher minimum wage. Although many of these points can be a disadvantage to the likes of someone my age with little experience, I am still hoping to see what this increase to $10.10 can do for the economy as well as for many of those trying to make a life for themselves and their families in poverty.

  43. Citation: Wall Street Journal Newspaper Wednesday February 19th edition, 2014 VOL. CCLXIII NO. 40 A1, A4

  44. The town I live at the Jersey shore is a beach community and because the businesses are seasonal they are somewhat unique with respect to the how it pays part-time help since these businesses are exempt from the minimum wage regulations. In my town almost all kids at the age of 14 apply for “working papers” and have a summer job, the local businesses depend on this population of workers to staff the many positions that are available from Memorial Day thru Labor Day. The wages for these lower skilled positions being set by the market or what is known as the “prevailing wage” which is always below the current minimum wage. Since these jobs are entry level positions requiring minimal skills (busing tables, scooping ice cream, carrying umbrellas on the beach etc.) the business owners can hire additional staff to ensure their customers are satisfied with the level of service provided without being constrained by having to pay the higher minimum wage, this allows the business to prosper in a very demanding market that is subject to weather conditions and a very short season. The business owners have fought hard to maintain this exemption from the minimum wage law and have had to go to great lengths to fill these positions, over the past few summers student workers have come from as far away as the previous Soviet republics. Having gained some experience after a summer or two the goal of these workers is to move to a minimum wage job or a job that includes the ability to work for tips (chamber maid, parking attendant, bar-back etc.). If the business owners had to pay all workers, including the lower skill jobs, the minimum wage this would force the wages of the higher skilled workers even higher, above the minimum wage or the business owner would not be able fill the higher skilled jobs. Also, if all jobs were subject to the minimum wage rules the business owner would look limit the hiring of the entry level jobs which would reduce the opportunity for the youngest most inexperienced workers and cut off the path to the more skilled higher paying jobs. If lower skilled younger workers are paid a minimum wage that they perceive to be a “living wage” they might not have the motivation to take the next step; of additional training or higher education. For these reasons I believe that some businesses and markets should be free to pay the prevailing wage vs. being mandated to pay the minimum wage.

  45. The debate on whether or not to raise the minimum wage has a huge impact on the economy. “According to the Bureau of Labor Statistics, last year 1.566 million hourly workers earned the federal minimum wage of $7.25 an hour; nearly two million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others).” (Pew Research Center). The main demanders of minimum wage jobs are the same ones who are hurt the most by an increase in these wages. Typically, minimum wage jobs are sought by low-skilled workers in hospitality and food service fields. Most minimum wage earners are young, part time workers. Teenagers are huge demanders of minimum wage earning jobs. Raising the minimum wage will increase the income of those who are able to keep their jobs, but could be detrimental to those who are laid off because company costs rose and they were no longer able to post a profit. Those who are able to keep their jobs will be greatly helped by an increase in wages. Raising the minimum wage would help a single working parent with two kids raise their family by providing them with extra disposable income, but could just as easily hurt that same family if their income was reduced to zero because of company cut-backs. Wages paid to employees are the biggest cost to companies, so when labor cost rise, companies are forced to cut back on the amount of labor they supply in order maintain profits.

  46. Dongsheng Luo
    March 2, 2014
    Professor Andre Neveu
    GECON 200
    Blog Reflection
    Would increasing the minimum wage help a single working parent with two children to raise the family?
    As for the purpose, it’s absolutely right for people. However, we have to practice this action in real life. Thus, there will be some problems preventing practicing the action. Firstly, as employers, they need have enough money to pay for their employees as the wage. They need money to support increasing minimum wage, otherwise they will find some way to replace the idea just in order to response to the government. Secondly, as the increasing of the minimum wage, the standard of living will be increased that means the expenses of family will be increased. Thirdly, according from this article, there are two sentences, “the living wage is estimated to be about $8.52 per hour for a single adult, but $23.48 for a single adult with two children.” and “In a more high-cost city like Arlington, VA, the comparable wages would be $13.22 and $29.40 per hour. For a single adult with two children, this would be more than $60,000 per year.” They means the standard of living is different among the states of the U.S. So, we cannot make a standard for all of family. On the other hand, we should make probably standard which is suit for each different place or state so that those family living there can have better life rather that under the standard of living.
    In conclusion, I think the increasing of minimum wage is not a good way to alleviate poverty. Like the article talked, the Earned income tax credit could be a better way to help the poverty.

  47.     Do employers have any responsibility to pay wages that their employees can live on? The answer should be yes. If employees can not live because employers offers so less money, what is the reason of they can still work for this employers? Then if someone Claims that a pay cut would benefit the entire country, it is a Fraud. And it is only means reduced purchasing power, reducing the domestic market. If the industry is so poorly managed, everyone can not live a decent life, why we still need that industry. nothing is more important than what the wage problem. Most people in this country rely on a living wage. Their quality of life level – wage thickness determines the prosperity of the country or not. And I think the only cooperative relations between employers and employees, that means both profitability is a prerequisite. If the company can not pay for a normal life guaranteed wage for their employees, then the company can go bankrupt, because it does not need to exist. Therefore, the employer has responsible for employees ensuring that earn wages can live.

  48. Question:
    Would increasing the minimum wage help a single working parent with two children to raise the family?
    As for the purpose, it’s absolutely right for people. However, we have to practice this action in real life. Thus, there will be some problems preventing practicing the action. Firstly, as employers, they need have enough money to pay for their employees as the wage. They need money to support increasing minimum wage, otherwise they will find some way to replace the idea just in order to response to the government. Secondly, as the increasing of the minimum wage, the standard of living will be increased that means the expenses of family will be increased. Thirdly, according from this article, there are two sentences, “the living wage is estimated to be about $8.52 per hour for a single adult, but $23.48 for a single adult with two children.” and “In a more high-cost city like Arlington, VA, the comparable wages would be $13.22 and $29.40 per hour. For a single adult with two children, this would be more than $60,000 per year.” They means the standard of living is different among the states of the U.S. So, we cannot make a standard for all of family. On the other hand, we should make probably standard which is suit for each different place or state so that those family living there can have better life rather that under the standard of living.
    The government should make a set of the rule to make the increasing minimum wage practice and make sure it do successfully. For the first problem, the government could give some subsidies to make up the loss of some company in a special period. For the second problem, the government need control the price of commodity so that people whose income comes from the minimum wage hold their expenses. For the last one, the government should make some different minimum wage for different states according to their different standard of living.
    On another way, the Earned income tax credit maybe a better way to alleviate poverty, because there are some different standard of living of different places, and those family live in there have different expenses for daily life. The Earned income tax credit is the best for this situation.
    In conclusion, I think the increasing of minimum wage is not a good way to alleviate poverty. Like the article talked, the Earned income tax credit could be a better way to help the poverty.
    Dongsheng Luo

  49. There seems to be two different sides to this argument: one that states the nation will benefit from the economic activity that should result from the increase in the minimum wage requirement, and the other that says this increase in wages will cause a negative reaction in business costs, e. It seems interesting that this topic can have two such varying opinions. Now, one thing I believe that most people are missing however is that this discussion of increasing the minimum wage is for individuals who are under federal contracts. In regards to the change of overall jobs/employment, I personally think this change will not greatly influence the job market. If you do however decide to predict the impact that this change will be, I would argue that it would increase economic growth considering that federal contracts are paid for by the government – and thus, increasing the “cost” of labor for the government, does not ultimately have any negative impacts considering the government can spend as much as they would like as long as their debt is perceived as having value.

Leave a Reply

Your email address will not be published.