The article that I am studying is Zeynep Ton's A minimum wage hike could help employers, too, in the Harvard Business Review. This article is a speculative piece about the effects of proposed minimum wage increases at the federal level. The author takes a look at companies that superior wages and benefits for their industry. The underlying theme is that this is juxtaposed against a common argument that raising the minimum wage will be universally harmful.
The common argument takes beginner's level supply and demand graphs and uses them as the basis for the claim. The basic elastic supply and demand graph shows that as the cost of a good increases, demand for that good declines. Thus, if the minimum wage increases, businesses will face higher costs, will pass those costs onto consumers, will suffer lower profits or will reduce employment, or some combination of these negative outcomes. The author here is pointing out that the world is a heck of a lot more complex than that. Microeconomics does not end with the study of rudimentary supply and demand graphs, but incorporates a broader range of considerations into its arguments.
The author highlights a couple of those arguments. The first is the "good jobs strategy". The second is the efficiency concept. The two are at times related. First, microeconomic principles can be used to examine the good jobs strategy. The author cites four firms in particular – Trader Joe's, Costco, Spanish supermarket chain Mercadona and convenience store chain QuikTrip. The author acknowledges that these companies do not have too many similarities, perhaps except for the nature of the goods they sell – they are all in convenience and food retailing. This industry is characterized by a st...
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...vers. Better people won't work for minimum wage, but better people make for stronger companies. And what of customers? There are price elasticities of demand to consider in this argument. They are not relevant at Costco, and Trader Joe's is good value for its competitive niche, but many Americans are perfectly willing to pay a higher price for better quality. Yes, there are other considerations not mentioned here – the effect of minimum wage on overall inflation and things like that – but the article is a great starting point for understanding the complexity of microeconomic analysis that goes beyond the superficial analysis we often see in the media.
Works Cited
Ton, Z. (2014). A minimum wage hike could help employers, too. Harvard Business Review. Retrieved February 2, 2014 from http://blogs.hbr.org/2014/01/a-minimum-wage-hike-would-help-employers-too/
Educated Americans and researchers biggest concern is that their minimum wage proposal is going to negatively affect our economy. For example, they predict that their wage is part of the labor cycle and if it increases it will raise prices for customers. In Brian Jencunas article, he expresses that, “Virtually anyone can do these jobs with very little training. This means the supply of potential labor exceeds the demand, making sala...
Asbury, Neal. “Raising the Minimum Wage Brings Minimum Benefits.” Money News. Newsmax Media, Inc., 14 Mar. 2013. Web. 19 Nov. 2013.
Small businesses operate with little capital and net profit margin. Opponents argue the increase of the minimum wage affect the small business owners the most because they have a hard time paying employees. The oppositions believe increasing the minimum wage creates a market distortion (“Federal Minimum Wage”). It means the government intervention in raising the minimum wage causes a higher price floor that defines as the minimum price for the employees’ service. Because of a higher price floor, it reduces the employment opportunities and business profit. For instance, according to Mark Wilson’s “The Negative Effects of Minimum Wage Laws”, he writes about a study conducted by Barry Hirsch and his co-authors about the methods of how employers adjust to a newly imposed minimum wage. In their study, employers cushion the impact of the minimum wage increase by “requiring better attendance, insisting that job duties are completed faster, imposing additional task on workers, minimizing hours worked with better scheduling, and terminating poor performers quickly.” In addition, businesses try to push the rising cost to consumers, which result in increased competition from imported goods. This makes them less competitive. The negative side of increasing the minimum wage affects employers, employees, and customers since study suggest every dollar bump to minimum wage workers come from the business owners’ or clients’ pockets; in addition, employers impose more job responsibilities to
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
Having minimum wage causes many people to become jobless all so a certain amount of people could live comfortably. Cooper believes that today’s workers are “stuck in jobs that pay so little they struggle to afford basic necessities.” Yes, some people may have trouble affording basic necessities, but at least they have some money that will help them out even if it’s just a little. A low paying job can make a difference between having nothing to eat at all or three small meals every day. If minimum wage increases, than the lives of many people would become even more difficult, and unbearable. A job that pays a little money is better than no job at all.
One of the most talked about subjects in the U.S economy is the topic of minimum wage. With president Obama working to increase the minimum wage to 10.10$ per hour people, both economists and politicians alike, have been debating whether or not raising the bar is a smart idea. At a time when the country the country’s inflation continues to rise at a steady pace and Americans are constantly working to feed their families, some economists know that a raise in the minimum wage would help elevate some of the difficulty. The last time the federal minimum wage was raised was in July of 2009, where rose from 6.55$ to 7.25$. However there are plenty of reasons as to why the wage should be raised. Some may not think it, but raising the federal wage could very well assist the U.S with some of its largest economic problems; the increasing standard of living in the U.S, the recession in the economy, and even the ever inflating U.S national debt.
...the future. Not only will raising the minimum wage provide more money but the workers can supply more food, be able to pay all of their bills and spend more if the wage was raised by at least five dollars. It could also benefit college students that are trying to find a way to pay for their education. Over 88 percent of workers who would benefit are at least 20 years old and in college (Cooper and Hall 2013). On the other hand, increasing the minimum wage can also cause higher rates of unemployment.
Equally, a higher minimum wage attracts new players in the competition, making the hiring process hard and unguaranteed. On the demand side of the market, if the minimum wage exceeds the normal market wage, considering the law of supply and demand, some workers will lose their jobs or have their hours cut (The minimum wage delusion/Forbes Magazine). The evidence from past directs that increase in the minimum wage has led to a small percent of decrease in employment of low-skilled workers slowly rising unemployment (Mises
Furman, J., and Stevenson, B. (2014). Congressional Budget Office Report Finds Minimum Wage Lifts Wages for 16.5 Million Workers. Retrieved from http://www.whitehouse.gov/blog/2014/02/18/congressional-budget-office-report-minimum-wage-confirms-consensus-views-beneficiari
If the minimum wage increases, those people that are skilled and well trained with salaries over the minimum wage could feel the competition from those unskilled workers who will have a raise. These high skilled employees could demand a higher rate, making things even more difficult to a business owner. Therefore, an individual must build experience and knowledge through out the minimum wage; in addition, a well-experienced worker has higher possibilities to get into a better position with a higher income. In addition, education is a fundamental milestone in any individuals’ life in which holds the roots of success; a well-educated individual could have a broader window of success and a job that gives him or her a peaceful life. The economy of the US can be harmed if the minimum wage increases. In addition, restaurant chains’ owners could look into technology improvements to prevent the hike in the workers’ wage. As Lydia DePillis in her article on the Washington Post writes, “Many chains are already at work looking for ingenious ways to take humans out of the picture…” she argues that technology already has led thousands of workers from in many airports, grocery stores, tollbooths, gas stations, banks, and automotive factories jobless and similarly could occur if the minimum wages keeps growing. Some big-chain restaurants could
Sklar, Holly. "Raising the Minimum Wage Will Help the Poor." Opposing Viewpoints in Context. 2011. Web. 24 Feb. 2014.
This is somewhat related to my second reason on why minimum wage should not increase in the United States. Companies are going to raise their prices on their products. They will increase their prices in order to be able to pay all of their employees. That situation will cause the employers extreme anxiety due to money issues. Companies may have to eventually shut down if they are not able to pay their employees like they need to be paid. If the minimum wage increased and businesses/employers have to pay those higher minimum wages (higher salaries/income) to their employees. To offset them having to pay more money to their employees, they offset that extra cost to the customers or consumers generally who shop with them. It creates a ripple effect for a city, county, or region. Prices have been going up without the increase of minimum wage so imagine when if I does happen to go up. Increasing minimum wage will definitely hurt small businesses more than
Opposite argues that increasing the minimum wage would cause businesses to cut off employees and would not boost the economy, this is false because the increase in minimum wage will boost the economy by an “increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period.” (Minimum wage) In addition, the opposite side may view that “raising the minimum wage would increase the price of consumer goods,” but this will not happen because “the federal minimum wage is not indexed for inflation, its purchasing power has dropped considerably since its peak in 1968.” (Minimum
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...
Many areas could be affected by a change in minimum wage, but potentially the most drastic change would be to unemployment. Advocates of a higher minimum wage insist that a raise would significantly decrease the unemployment rate in the United States and improve the quality of living. However, there are conflicting opinions on this. Higher minimum wage would mean higher labor costs for business owners, thus making it more difficult for employers to maintain the amount of workers they have, let alone add new employees. Raising the minimum wage does not increase the value of the worker's labor; it increases the cost of the worker's labor. As a general rule the more something costs, the less of it people will buy. This is true of not only consumer goods but also of workers in the labor market.Many jobs come from large corporations but they also come from small businesses.There are 23 million small businesses in America, accounting for 54% of sales and 55% of jobs. Raising the minimum wage means that all of these corporations and businesses will have to dig deeper in...