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Don’t Fear An Increase In Minimum Wage
An increase in minimum wage may mean paying employees more for doing the same job, but that does not mean it is without its benefits. The Huffington Post recently looked at reasons why you should embrace the change.
According to some estimates, many minimum wage employees will leave employment for a 5 or 10 cent per hour increase in pay while higher minimum wages may decrease employee turnover. The cost to replace a departing worker averages one third of that employee’s annual salary.
Employee morale and productivity are also, of course, affected by wages. A worker who is unable to make ends meet is less likely to put in his or her best efforts. As a business owner, you probably want to pay more to keep your workers satisfied but fear that if you do, your prices will have to be higher than your competition’s. A minimum wage increase solves that problem since your competitor will have to raise salaries as well.
Economic realities dictate a raise in the minimum wage but we also can’t ignore the moral arguments. It is simply, the right thing to do. At today’s wages, the low wage worker is the working poor. Had the minimum wage in New York kept up with inflation, it would currently be $10.80 per hour. At the current proposed increased rate, a family of three will still be below the federal poverty level. As a society, we need to make a statement that says the American Dream is real and it is attainable. If you work hard, you will succeed. The message now? If you work hard at two or three jobs you might be able to survive.
Make sure and read Dane’s take on this.
Photo by AMagill
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Dane Carlson on February 16th, 2012 11:06 am
FYI This article does not represent the editorial (ie, mine) policy of this website.
Fear a minimum wage increase. The best thing that will happen after a minimum wage increase is that more under-skilled employees will cost more than their skills are worth, thus making their jobs unprofitable to sustain.
For example, if Joe can manufacture 10 widgets per hour and the company profits $0.10 on the sale of each of those widgets, not including the cost of Joe’s labor, then if the minimum wages goes up $1.10, Joe’s hour of work would now cost the company $0.10. Joe’s job would then be terminated, because it’s better to earn $0 than to lose $0.10.
Hopefully, there’d be someone capable of manufacturing 12 widgets per hour to take Joe’s place so the company can stay in business. If not, the company might choose to outsource the whole thing overseas.
Dan on February 16th, 2012 12:01 pm
Exactly, Dane. Artificially raising wages does NOTHING to improve the standard of living, overall. It reduces incentives for employing people at the lower tier and it simply raises the consumer price index accordingly. Then the liberals wail that the cost of living is killing the low wage employee so we raise it again and what do you know… the consumer price index goes up again. Well, DUH. If you artificially increase the price of doing business, the consumer price index goes up. Inflation is a result of government regulations. The only reason something should go UP in price is because of scarcity or increased demand. But when you are forced to do something that raises prices, by the government, you get a rise in the consumer price index.
It’s frustrating that people can’t understand that. Free markets are the key to a healthy economy. That goes for wages, too.
Steve on February 16th, 2012 12:17 pm
Minimum wage raises are well-intentioned, but they accelerate the permanent automation of certain tasks that are only barely require human intelligence or skill level, and which consequently are at the lower end of the pay spectrum. Homeless people are permanently dependent on handouts because there are few businesses who would even consider taking on the risks involved (potential absenteeism, psychological problems?) if they are forced to pay the minimum wage. While you think it’s nice to existing employees, it only makes it that much more difficult for those without jobs, who would offer their labor for a lower price than the cost of automation. The solution to this whole problem is to end minimum wage, and revise (allow for more variation… “privatize”) the education system so that we get proportional skill level to justify the huge cost of education. It’s a travesty that it is costing $10k per year and kids graduate without any greater skill level than ones in China or Mexico whose education is a fraction. If our govt education isn’t doing the job at a high premium, we need to open education up to competition, and start defunding public schools to fund ones that develop a track record for giving their students skills with “staying power” in the economy.
Minimum wage laws are rooted in the fallacy that someone other than the customers determines the prices of goods and services. Following the money trail, customers determine EVERYTHING. We always have the option to not buy, and pushing some costs over its value to us leads to zero future sales, as we simply automate the task ourselves (such as food preparation instead of eating at restaurants which had to hike prices due to labor cost increasing). The minimum wage is an attempt to usurp the people’s right to trade labor and favors with one another using a convenient trading tool, currency.
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