Minimum wage debate: Ecomonic Standpoint

Kaylin Holbrook

Minimum Wage has been a debate for the past couple of years. People have many reasons why they think minimum wage should increase or stay the same, but have they ever stopped and thought what the outcome would be? In today's post, we will be looking at an economic standpoint on why we should not increase minimum wage.

In the article 9 Reasons Why Raising the Minimum Wage Is a Terrible Idea by Ira Stoll states facts and reasons why raising the minimum wage is a bad idea on an economic point-of-view. Stoll's stance is against raising minimum wage because, " It's a big country. The costs of living, especially housing, vary widely in America from state to state and city to city." Meaning the cost of living goes up and down in different areas of America. I agree with this statement because, although, the united states are a united country each individual state has a different way of adapting to life. $15 dollars in Texas is a lot of money for the minimal worker, but $15 in New York could be a good average because of their way if living. Therefore, the minimum wage should also vary from state-to-state. Stoll also says. " twenty states already have higher wages than the federal minimum," therefore, why should we make the federal minimum raise if we can just petition and ask the states to raise their minimum wage? He brings up a good point here. I never thought of just having the states bump up their minimum to fit their needs. From my understanding and from what Stoll just said, I can safely say that minimum wage increase should not be a concern at federal level. If the federal wage is raised that will probably put more people in debt and out of a job because the economy can not support them. When the economy can not support the people, that is when we start to get in trouble and become a corrupt country. Jealousy will raise even higher for the people who do have money, and people will become even more stingy and do anything just to get a dollar.

When most people think of minimum wage they think of teenagers working a part-time job. And that's what minimum wage should pay for; teenagers. Stoll says, " A lot of minimum wage earners are second or third-job holders in the household. This means, the teenagers who have jobs, have both parents working. Minimum wage workers also include retirees with income from savings and Social Security who own their homes mortgage free." To sum that up, minimum wage workers are workers who are entry level, like teenagers, or retired people who are living off their Social Security. I agree with Stolls statement because in most restruants, yogurt shops, and stores like Target have teenagers working there. On the other hand, the adults who have to provide for their family don't get settle for $7.25 an hour. If the sole provider does have a minimum wage job, I ensure you they are looking for another job to get paid at a higher rate that suits their budget because they have motivation (a family) to earn more than the minimum. But, if the sole provider is not looking for more than a minimum wage job, one, these are probably the people who want to raise minimum wage so they won't have to get a higher education to move up the ladder in life, and two, there are more Millennial's and Gen Next generations who are stereotyped as "lazy" but have more ambition to find a higher paying job than the sole provider.

Age vs. Minimum    

Moving on to how it will affect the economy, Stoll points out three very important aspects. The first one would be, "raising the minimum wage will eliminate jobs." I agree with this because, businesses would be forced to pay a higher wage to the minimum level workers, therefore, there would be a decreased need for entry level workers. The second point from Stoll is, "Businesses will be likely to consider replacing workers with robots or computers, as a long-term investment." If you think this is insane, think again. Machines have been replacing workers from day one. Think of the cotton picker, online banking, or even machine telemarketers. If the wage is increased business will have no choice but to replace the minimum workers ( entry level work) with machines. Another example is Europe, they already have machines that take orders to replace the workers, so they could cut back on wage prices.

McDonald machines in Europe

  The last point Stoll mentioned was, "A minimum wage increase will reduce the incentives for low-wage workers to get an education to move up to a higher-paying job." This statement is probably the most important and accurate because, today's generation of young workers, and even generations below them are becoming lazy and just want the easy way in life. They will have no goals or ambitions to even think about getting an education to increase there amount of income. They will literally work their 5-7 hour job, play video games, and sleep. In the long run this will not be economically stable because there will be less doctors, lawyers, and other professional workers to replace the ones we have today. And this will lead to the $15 minimum wage workers to make no wage because there is no suitable CEO, or boss man to run the business in a declining economy.  A good example of Stolls main point can be watched in the video:  The truth about minimum wage .  

In the article, The pros and cons of raising the minimum wage, by Chad Halvorson also states why minimum wage should not be raised. Halvorson states, "Minimum wage increases will lead to layoffs, price increases, fewer hiring’s, and outsourcing jobs.” These cons of increasing the wage, will affect the economy greatly. When layoffs happen, it leads to more unemployment, which was the whole reason why people wanted a wage increase in the first place. And layoffs will happen because when “the same number of employees are at a business and they are being paid at a higher rate, business can no longer support that many workers.” (Halvorson) For an example, if the original cost of an apple is $1, when the minimum increases the apple price could move up to $4 because of increased wages. Although the wages were increased, the company must make an equity, therefore, the consumer pays difference. In simple terms, minimum wage increases = price increases = consumers end up paying the difference.This will also lead to fewer hiring's because they will outsource to another country who they will be able to pay less. If you had the option to pay someone $5 or $15 which would you pick? In the end, the big picture of raising minimum wage will create fewer jobs for the people who the minimum wage was supposed to help.

 Outsourcing

            In the last article, The Case Against the Minimum wage by Daniel Bier, his economic point-of-view is simple, raising the minimum wage will lead to unemployment. Bier says, “We will have a surplus of workers (surplus meaning unemployment) from employers laying off their employees, and it would be harder for young and unskilled workers to get entry level jobs.”  I agree with this statement because young workers are new and naive when they enter the work force. This is the whole reason for a minimum wage; the entry level workers receive the lower paying jobs so they can build relationships, knowledge and an understanding of how the work place really works. This is even true for me. When I first entered the work force at the age of 16, I was getting paid $7.25, but now, two years later, my wages have increased, and I have had an internship, which gives me experience, knowledge, and responsibilities that may lead to a higher wage in the future. Companies would want to hire people who already know what they are doing so they wouldn't have to spend time and money on a minimal worker to train them.

            Bier also states that, “workers may get a few weeks or months of higher pay, only to be unable to get a job at all in the future, therefore, their wages will drop to zero.” To expand on this statement, the people who are already working may get higher wages, but when they get laid off, fired, or if they even quit, they will have a difficult time entering the work force again with the competing market for jobs. Increased wages lead to the employers, “cutting back hours, laying off the least productive workers, hiring fewer new inexperienced workers, replacing labor with robots, and replacing lower skilled workers with fewer and higher skilled workers” according to Bier. I also agree with this statement because companies will want to spend their money sparingly, and only higher the top suitable employees, which does not include the least productive workers. Watch the video below for more information about how minimum wage works.

 Video:How does the Minimum Wage work? 

            In the end, minimum wage should not be increased because it will cause the economy to increase unemployment. Raised wages include layoffs, cut backs, unemployment outsourcing, price increases, fewer hiring’s, and eliminates jobs. According to Barrack Obama, he says “No one who works full-time should have to live in poverty.” This statement is true to an extent, but most of the people getting minimum wage are teenagers, and retired people, so this statement is not true. If we do raise the minimum it will lead to a surplus of workers and higher unemployment. The minimum wage should not be raised by the federal government, because each state has a different standard of living. A minimum wage is meant to help, not hurt the minimal workers, therefore, raising the wage will do just the opposite. Raising it will make the companies get rid of the minimal workers (teenagers) and find higher educational workers or replace the workers with machines so they can get more bang for their buck. Another outcome of raising the wage is raising the prices on goods and services so the business will not go in debt. But as Americans are know for, they like there money, and they like a lot of it. Raising the price on goods and services will lead to less consumers buying products, and this is a key aspect in keeping the economy going. Less buyers equals less products being bought, which equals a decline in money moving around the economy, which means the economy decline.

                               Works Cited

Ira-stoll. "9 Reasons Why Raising the Minimum Wage Is a Terrible Idea." Reason.com. N.p., 03 Mar. 2014. Web. 25 Oct. 2016.

Bier, By Daniel. "The Case Against the Minimum Wage." The Skeptical Libertarian. N.p., 25 Feb. 2013. Web. 25 Oct. 2016.

Halvorson, Chad. "The Pros and Cons of Raising the Minimum Wage." When I Work. N.p., 06 Mar. 2014. Web. 25 Oct. 2016.