People think that raising the minimum wage can benefit people who have low-income. Well, known business and corporations do not want the minimum wage to increase, as of a result they will have to pay their employees more and corporate will lose money from paying their employees more. According to “Issue: Minimum Wage” (Marcia Clemmitt) “Business owners in some labor-intensive, low-wage industries face serious uncertainties when minimum wages rise.” Also, companies would rather pay a teenager and not an adult because adults would complain about being paid minimum wage. Adults make a living off of what they earn teenagers have a job so they can have extra money when they go out. If minimum wage increases that means that everything will be more expensive since their income is rising.
Small businesses will be in more danger than large business will be. Majority of small company’s pay their workers the minimum wage, while employees at large businesses are paid by salary. Due to the increase in the federal minimum wage, small businesses will receive less profit for their company, will have to lower their employee count and teenagers will have a decreased opportunity to get an entry level job. With an increase in minimum wage, businesses are going to see a decrease in their profits. According to the Center for American Progress, “calculations show that prices would have to rise modestly and profits would have to fall in order to accommodate President Obama’s minimum wage proposal.” It is common sense that since the pay rate for employees is going to increase, than the business will be spending an increased amount of money on labor costs.
Also this would have a profound effect on other sectors of the economy. After reading TheWeek.com article, "There's no doubt that a higher minimum wage would create an immediate drag on earnings and create pressures for higher prices," I feel raising minimum wage radically would more likely lead to higher priced goods and products that you buy. The increased cost on the company from raising minimum wage would have to be absorbed by the consumer. This would be a direct effect of raising minimum wage approximately $3 in a short period. There are several things which complicate the situation ... ... middle of paper ... ...y.
(See Figure 1) Losing jobs is a serious issue because the unemployment rate would rise. This makes it harder to lower an unemployment rate because you have just raised it. Less people would be able to find jobs as well. When it cost more money to hire low-skill workers, businesses suffer. For example, fast-food chains rely mainly on low-skill workers.
But high school and college students are not the entire percentage of minimum wage earners. When minimum wage is raised, it affects the entire economy in many different ways. First, raising minimum wage affects the amount of job availability. Many businesses will reduce their amount of employees, because the business will not be able to afford to pay all the employees and still gain profit. As a matter of fact, James Sherk, a Bradley Fellow in Labor Policy, states “Businesses will not hire workers whose labor produces less than the cost of hiring them” (Sherk 2).
A raise in wages will make cost in products go up, so then employers will not be able to afford to pay employees the higher minimum wage. This being said, another issue would be that it will cause an increase in job loss. “Raising wages would boost employee paychecks, but it could cause cost-conscious companies to reduce hiring”
What would happen to your business if the minimum wage were drastically increased? Could you afford it? What impact would it have on those making more than minimum wage? The questions have been debated for sometime, but recently the debate has intensified because President Obama made a proposal to raise the minimum wage to $9 from its current status of $7.25. Bustamante’s article “$9 minimum wage sounds good but it would be bad public policy” focuses on the negative affects implementing a policy to raise the price floor on minimum wage would have on the United States.
In many cases, un-skilled workers would receive less hours to so that the employers could accommodate the increase in wage costs. This would actually have the opposite effect on low-skilled workers and would in fact increase the poverty rate. There are many other things that can be done to fight poverty. For example, raising the Earned Income Tax Credit amount would do far more for fighting poverty than haphazardly raising the minimum wage. Another argument for raising the minimum wage is that it would provide a “living wage”.
Some experts say that, raising minimum wages can improve the life style of those employees who are under the poverty line. They believe that by raising the minimum wages net income of the working class will increase and helps to keep the financial balance in between the management level and the operational level employee. In contrast, there are other people who think that by rising the minimum wages can have negative effect is country’s economy since company can hire low number of staff to keep expenses low, resulting massive unemployment population in the country. Some economist says that with their research they have found that actually increasing minimum wages may not have the positive impact in country’s economy, and might not have positive impact on its people either. According to them, the quantity of labor demanded increases as the price of labor falls.
We are often told that increasing the minimum wage will destroy jobs by making workers more expensive to hire. However there is quantitative data showing that increasing minimum wage will have a positive effect in the employment rate. Wessmann quotes The Economic Policy Institute releasing a report estimating “that raising the federal minimum wage to $10.10 an hour, up from $7.25 today, would add an additional 85,000 jobs to the economy” (Would Increasing the Minimum Wage Create Jobs? n.page). There are a couple explanations making a connection between increasing the minimum wage will create job opportunities in the united states.