Source Summary: Minimum Wage
In his 2014 State of the Union address, President Obama announced his intention to sign an executive order raising the minimum wage of federal contractors to $10.10 per hour. This move reflects the minimum wage increases that went into effect in many states at the beginning of the year, as well as similar measures under consideration in other states and the federal government. While many activists welcomed this news, a Feb 5th New York Times article examines the possible negative effect of increased minimum wage owners on small businesses, weighed against the advantages predicted by proponents of the laws.
On January 1st, New Jersey increased the minimum wage from $7.25 to $8.25 per hour, a mandatory increase which Dolores Riley, owner of a small child care business, fears may put her out of business. Even though most of her employees are already paid more than the minimum, she says she will have to raise pay for all employees “to maintain the current pay structure.” The Times article reports that this apparently small increase will actually add between $10,000 to $15,000 to her annual operating costs. The business, already squeezed by the economic downturn, cannot support that without laying off employees or raising prices, which Riley says she cannot do without losing a significant portion of her customer base.
Another example is Charlene Conway, who owns two family recreation facilities in Massachusetts. Her company, with revenues of less than half a million dollars annually, also cannot support the increased salaries she will have to pay. In the past, she has stopped hiring people under 16, who she says are not worth the $9 per hour. An unintended side effect of the minimum wage increase, she says, is that it “eliminates the opportunity for young people to get started in the work force” (Perman). Her only option as a business owner if minimum wages reach $10 per hour would be to reduce her staff down to ten and find ways to increase their productivity.
The article also quotes some small-business owners who find those concerns to be “short-sighted.” Amanda Rothschild, the owner of a small café in Baltimore, claims that paying her employees well actually saves her money on training and waste because it reduces employee turnover. Her employee turnover rate is 22%, in an industry where 50-75% is the norm. Unlike the other business owners in question, Rothschild’s café has seen increases in revenues over the past few years, a trend she expects to continue.
The United States minimum wage is not indexed to inflation. Due to this fact, the purchasing power of minimum wage falls as the price of consumer goods increases. The current hourly minimum wage is set at $7.25, however many states do pay above this rate. One example of this is in Michigan, the current hourly minimum wage is $7.40. The last time a change occurred to raise minimum wage was in 2009. President Obama has put out a proposal that is designed to raise the federally required hourly minimum wage to $10.10 in 2015. The public opinion of this proposal is all over the board ranging from a positive outlook to a negative one. Some of the negative remarks are that it would dampen the economy and shrink the hiring done by small businesses. “The Household Survival Budget for the average New Jersey family of four is $58,500 and for a single adult is $25,368 in 2010. These numbers highl...
Him having this experience made him bring up a point saying, that every business with minimum wage employees has to respond to this one way or another and i quote, “ Those who say raising the minimum wage will have no effect on employment are dreaming.” For example, if the minimum wage is raised to $15, for most businesses like Brodsky’s, that will be the entry level pay which will cause them to cut certain things out whether its employees, supplies, etc. to stay in business. Thus, making it obvious that raising the minimum wage will cost jobs one way or another. But on the other hand, why have a business if they can’t keep up with the demands of the employees? Why should a person pursue a business if they can’t pay their workers the money they deserve, considering the majority make a living off of the job. Do people ever think about just simply making changes to the business, whether it’s adding a new feature or upgrading the overall quality of it. For example, something like a restaurant can add in special day of the week where they serve a particular dish just on that day, which will bring in more profit because of supply and demand. Another example, for business more like a store, the owner or employer can expand their range product sold in the store; if they sell hats, shoes, and clothes, maybe then they could range out and add in book bags for the school time or even accessories. There is always alternatives to bringing in more profit when needed, instead of just cutting
Many people against raising the minimum wage create arguments such as, “it will cause inflation”, or, “ it will result in job loss.” Not only are these arguments terribly untrue, they also cause a sense of panic towards the majority working-class. Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has consistently increased, even when the wage has been
Raising the minimum wage to $15 an hour has been extensively debated over the last year or so. Minimum wage is the undermost wage allowed by law to be given to an employee for their services. Introduced in 1939, its purpose was to stabilize the economy, which was healing from the Great Depression. Most importantly, it was designed to protect the health and welling-being of employees. Currently, the Federal Government 's minimum is $7.25 per hour ($14,500 per year). The ones in favor of the increase are saying that it used to be a living wage; however, now it is not and it now needs to be line with changes to the cost of living. In addition, an increase in minimum wage can increase the productivity and decrease income inequality and poverty. On the other spectrum, the ones who are against the increase are saying that the increased labor cost will drive up unemployment, affect small businesses negatively, and cause other workers from different
In the 2013 State of the Union, President Obama proposed raising the minimum wage from the current $7.25 to $9.00 by 2015. This has caused arguments between the rich, small businesses, minimum wage workers, and the unemployed because it affects each of them differently. Obama’s plan is to bind the minimum wage to the cost of living, which ensures that minimum wage goes up with inflation. In general, this benefits minimum wage workers by improving their standard of living.
After the protest in New York City, the issue of raising the minimum wage has come up once again. Seattle is spearheading this cause with a proposal of raising the minimum wage to $15 per hour. This will help minimum wage workers a great deal by increasing their income. However, there are concern that this move could hurt certain businesses, which can lead to higher unemployment and contraction of the economy. The ethical issue surfaced as this will benefit some at the expense of other.
A federal minimum wage was first set in 1938. The first minimum wage was just 25 cents an hour in 1938. Can you imagine surviving off of 25 cents an hour? Now just over 70 years later the federal minimum wage is now 7.25. The question at hand is the federal minimum wage enough to meet the minimum requirement for a good, happy and healthy life? Some states and cities say no. While a select few states and cities have mirrored the federal minimum wage of 7.25, some states have placed their state or city/county minimum wage marginally higher than the federal minimum wage. So why would some states prefer to have a higher level than required by the federal minimum wage when some state have decided to match or even go below the federal minimum wage level. The answer to this question lies within each state city and county and how they perceive the cost of living in the presiding area. Minimum wage needs a makeover in America despite some of the negative effects that may come along with it. This paper will explore the reasons behind federal and state minimum wages and why some of them differ among states counties and cities across America.
On April 4, 2016, California Governor Jerry Brown signed a bill that would significantly raise the minimum wage for California workers. By 2022, California 's workers will receive a minimum wage of $15 per hour (Kurzweil, Anthony, Sara Welch, and Kareen Wynter). Brown signed this bill because employees cannot live above the poverty line if their minimum wage is not proportional to the cost of living (Scheiber, Noam, and Ian Lovett). The purpose of the minimum wage is to ensure that workers can provide essential amenities for themselves and their families. Many economists have been in a debate about this topic with mixed feelings, whether increasing the minimum wage would be a reasonable legislation or not. For most average American workers, at first, the idea of raising their salaries might make them feel thrilled and optimistic. However, increasing the minimum wage will have its pros and cons effect on the economy. Despite numerous of arguments from both sides, a compromise can be met regarding minimum wage.
Some think that the minimum wage should not be raised, but others think that the minimum wage should be raised. If one had to be chosen, raising the minimum wage would be better. The minimum wage should be raised because if you were to work full time on minimum wage, you are below the poverty line; Also states that did raise the minimum wage above the federal standard have had more job growth than states that did not. Finally, "Minimum wage workers are much more likely to immediately go out and spend that extra money in the economy," says Heidi Shierholz of the Economic Policy Institute, which favors raising the minimum. "That's because they're often living paycheck to paycheck."
"Raising the minimum wage will benefit about 28 million workers across the country. And it will help businesses, too - raising the wage will put more money in people's pockets, which they will pump back into the economy by spending it on goods and services in their communities." -- President Obama
Currently, in the United States, the federal minimum wage has been $7.25 for the past six years; however, in 1938 when it first became a law, it was only $0.25. In the United States the federal minimum wage has been raised 22 times since 1938 by a significant amount due to changes in the economy. Minimum wage was created to help America in poverty and consumer power purchasing, but studies have shown that minimum wage increases do not reduce poverty. By increasing the minimum wage, it “will lift some families out of poverty, while other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty” (Wilson 4). When increasing minimum wage low-skilled, workers living in poor families,
"Bill Gates: Raising Minimum Wage Can Destroy Jobs." The Foundry Conservative Policy News from The Heritage Foundation. N.p., n.d. Web. 14 Mar. 2014.
They have long argued that requiring employers to pay workers more will force many of them to either cut back on hours, put off hiring, or lay off employees in order to keep their labor costs down. “Raising the minimum wage will kill jobs and stifle economic output,” NFIB Manager of Legislative Affairs Ashley Fingarson said earlier this week, as the organization sent a letter to the Senate urging lawmakers to vote against a bill that would raise the minimum hourly rate from $7.25 an hour to $10.10 an hour. (The Washington Post) Many businesses will be hurt by the increase in wage rate due to lack of expenses of paying employees more, causing businesses to lose money and even go out of
Many critics claim that that raising minimum wage increases unemployment, especially for unskilled workers, and harms small businesses, including grocery stores and restaurants. The argument declares that companies such as these rely mostly on unskilled workers for labor, and if the minimum wage increases, then their profits and, therefore, hiring would decline, creating a...
Because of this, many employees tend to leave when they have found a job with higher pay. This increases the training costs for their employees, as they tend to not stay for too long.