Minimun Wage increase-good or bad?
Topic: Rural area business plan
May 26, 2019 / By Eda Question:
With all the debate over the minimum wage increase, I have to know-do you think it's a good thing or a bad thing? Backup your reasoning with possible economic ramifications from either increasing the wage or leaving it alone. Most logical answer wins!!!!
Best Answers: Minimun Wage increase-good or bad?
Chantale | 2 days ago
It is alright for the less than 5% of the workforce making minimum wage and bad for everyone else. If you increase wages $1/hour from the federal minimum this is an increase of 20% in wages for those making minimum wage. This is pretty good if you make minimum wage as most employers pay their employees more. Consumer prices will only be modestly affected by an increase in minimum wage. Restaurants and bars is where you will see the greatest increase in prices.
If you are making $5.75 and the minimum wage goes up to $6.15, you will be making $6.15 and lose any pay increases you have received over the time you have worked. This kind of sucks for you. You will be making more money, but not really be gaining anything in terms of buying power. Also, you will be making the same as someone they just hired off the street.
Wages, like anything else are controlled by market forces. In many metropolitan areas, there are hardly no minimum wage earners (except servers, but they make tips so they really don't make the minimum wage). Try to get a job as a stocker at evil Wal-Mart, you will be paid $7.50-8.00/hour. Want to flip burgers at McD's, that is worth $8.50-9.00/hour. In many rural areas, where minimum wage is more common, small businesses cannot afford the increased cost of labor that an increase in the minimum wage would create. In rural areas the cost of living is much less than in cities, thus a higher wage is not necessary.
The main questions you have to ask yourself:
1. How many people are actually supporting a family while working a minimum wage job (or two) where they do not receive tips or any other form of compensation? The answer, very few. This argument is not a valid one.
2. How will this benefit those making minimum wage? Answer: Will have some benefit. Since most employers do not pay minimum wage, their prices will only be modestly affected.
3. Will this hurt wage earners not making minimum wage?
Answer: To a certain extent, yes. They will not experience the same increase in wages that minimum wage earners do. Also, their wages may be frozen (no increases) to help offset the cost of the increase in minimum wage (particularly in the restaurant industry). Their buying power will decrease as some consumer prices increase.
To respond to another answer as I read through them. Increasing minimum wage with inflation may not be a terrible idea. It would give businesses a chance to plan and prepare for the increased expense and that increase would be a small one. Right now we sit at the same level for ten years and then increase wages 20% all at once. This can be hard for businesses who have a lot of minimum wage employees to prepare for.
👍 272 | 👎 2
Did you like the answer? Minimun Wage increase-good or bad?
Share with your friends
We found more questions related to the topic: Rural area business plan
Originally Answered: If unions negotiate a 10% wage increase in a major export industry, how will this change the exchange rate?
Do you want to treat this as a real world question or as a question with respect to a particular model?
In the real world, there is no simple answer:
1. For the U.S. the value of the currency on the foreign exchange markets is almost completely divorced from the trade balance. Over-simplified theory says too many imports and two few exports should tilt the exchange rate to balance,
yet the U.S. has had a major trade deficit for over a decade without such adjustment.
2. For many export industries, the cost of labor is negligible. If Canadian oil workers get a 10% wage increase, it will have no effect on the exchange rate or on the price that canada charges for its oil.
3. In some countries the exchange rate is set by the government, not the open market. Chinese workers in export industries have gotten wage increases of well over 10%, yet the Chinese government still keeps the dollar-yuan exchange rate (unofficially) pegged.
4. Or the export product could be a monopoly. In that case, the higher cost of labor can be easily passed on to customers so sales won't change significantly and hence there is no balance of payments push to the exchange rates. Consider the iPhone or rare earth minerals:
As for the answer for your model, it all depends on your model. One classic model says:
- increased production costs increase sales prices
- increased prices cut sales and hence revenues
- reduced export revenues with constant import expenses creates a trade imbalance
- a long term trade imbalance causes the exchange rate to change so as to bring the exchange rate back into balance
A variation says:
- increased prices means that a unit of the currency can't buy as much, which means, ipso factor that it is worth less
- if it is worth less, then people will not be willing to buy as much of it
- with reduced demand, prices fall
Neither of these has anything to do with loanable funds, but that doesn't mean there aren't other models where that could be a factor. (After all, if you don't care whether the model actually applies to the real world, you can assume anything you like.)
Bad. Raising the minimum wage raises the cost of a business (ones that are already operating at small profit margins), to recoup these costs they would have to increase the price of their goods, this would affect the people that frequent these establishments (usually the minimum wage earners) making their cost of living go up more than the wage did, putting them into deeper poverty. Also realize that the minimum wage hike would only provide an increase in those that have been recently hired (since most people working at any minimum wage job get a raise in about 6 months) and would not help anyone that seriously needs it.
👍 120 | 👎 -4
It's good for everyone. Minimum wage earners buy things! They spend all of their money always. This stimulates the economy, including for the wealthy.
A MW worker buys food at a restaurant. Restaurant owner gets money.
Compare this to the "trickle-down" concept and it becomes clearer. TD proponents believe that money given to the wealthy eventually "trickles down" to the poor and middle class.
However, what happens when the wealthy buy a Yacht in the Bahamas, and dock it in the Riviera? Nobody in America benefited at all.
Call a minimun wage increase, "trickle up". The Restaurant owner makes more profit, then they can afford that yacht!
Hope this helps.
👍 119 | 👎 -10
A minimum wage increase will lead in higher inflation rates. Therefore the available wage will decrease. I think that increasing the minimum wage equally with the inflation rate is the best.
👍 118 | 👎 -16
I'm of the personal opinion that minimum wage should be legislated to increase/decrease according to inflation/deflation, and give someone working on it full time a paycheck on the poverty line. If the 'minimum' is below the poverty line, we're living in a pretty sick world.
I'm not an economic genius...
👍 117 | 👎 -22
Originally Answered: Is the people who are opposed to the minimum wage increase the same as anti-union people to a degree?
Union means simply a group of people with the ability to analyze information about the company they work for . With careful analysis of information they can determine what a fair amount of benefits should be . They also have the power to keep others from taking jobs that they already are trained and employed at but at unacceptable wages and benefits by holding a line at the entrance that no one should cross .
Corporations call this blackmail and claim that the employees want to much .Still they manage to pay multi million dollar salaries to executives 6 figure incomes middle management and less then 60,000 a year to most workers who provide the product they sell .
The tradition of management is one of nepotism and cronyism . Should my long time friend have a prosperous business then in the event I should need employment surely he would create a position for me within his organization and thus was born the useless ruling class . Attractive women who married these privileged few also had family and brothers that needed or wanted better pay .The ordinary oversight of operations schedules and indeed the accounting and accounts payable as well as receivable transfered to the hands of relatives trusted to continue the good work and profit of the business .It is this same elitist group of white Christians that today dominate the middle and upper management ranks at every corporation in America . They feel privileged and deserving of outrageous pay and benefits not provided to the true labor force that produces goods and services .
It is this profit taking from the workers that Union members seek to remedy with fair pay and benefits .
They do not want to run the company out of business or force them to raise the price of goods but rather force the fair distribution of wealth from the profits of their labor .