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Friday, September 5, 2014

81. Should the minimum wage in the U.S. be raised to over $10?

I don't think the minimum wage should be raised to or over $10. The increase in wages would increase the cost of products. When prices go up people buy less of said product. Overall, this would hurt the economy IMO.

I was curious about this topic and did some research. Indeed, there is a lot of history related to the Minimum Wage in the U.S. For example:

In July 2009 Congress raised the minimum wage by 10.6%... In the following 6 months nearly 600,000 teen jobs disappeared even though there was a 4% growth in the economy. Earlier in the first half of the year GDP growth declined by 4% with a loss of 250,000 jobs.

Why? When you raise the price of anything people take less of it, including labor. See this article.

I believe the issue though is people who make $7 an hour suddently get boosted to $10 an hour... The buying power of someone who made $7 an hour and then makes $10 an hour will be about the same a few years down the road due largely to inflation. There’s also the issue that if the minimum wage is raised to $10 all other jobs would eventually have to be adjusted to reflect the new “rock bottom.”

Workers must bring at least as much value to the firm as they are paid or the company will fail and all jobs will be lost. There's no huge bailouts available for the estimated 6 million plus small business employers that probably employ half of the active private sector employees...

I believe, as a poverty program, raising the minimum wage is like killing flies with a shot gun... It is not very well targeted and certainly is inefficient.

I think the solution in part for those who are on minimum wage has to do with finding additional employment and/or getting further education to have a more marketable portfolio in education and skill sets.

About 3.6 million people were employed at or below minimum wage in 2012. There were roughly 127.6 million people who worked in the U.S. in 2012. This means that 2.82% of Americans made minimum wage (or less) in 2012.

So from what I can tell the impact of raising the minimum wage to $10 would in theory only affect less than 3% of the population in a positive manner. This is an interesting article from the Department of Labor from the Bureau of Labor Statistics.

That said there’s other opinions and data on the matter.

Raising the minimum wage is neither as wonderful as its advocates claim nor as dangerous as its detractors warn. On the upside, it would increase pay for millions of Americans, not only those earning the minimum but also those at fixed increments above it. These are people who could really use a raise. Contrary to what generations of students were taught in freshman econ, new research finds that minimum-wage increases at the state level have caused little, if any, harm to employment. “Outside of the simple Econ 101-type environment, increasing workers’ pay can improve the functioning of the low-wage labor market,” Arindrajit Dube, a University of Massachusetts economist, testified before Congress in March.

On the downside, a higher wage floor would undoubtedly price some marginal workers out of the market. Interns, for example, aren’t allowed to work for less than the minimum while they learn the ropes. (They can be unpaid, but then they’re not allowed to do real work.) A higher minimum wage would do nothing for the unemployed, among whom are the poorest of the poor. For them, other solutions are needed. “The search for a silver bullet is a mistake. We need lots of bullets,” says Steven Pressman, an economist at New Jersey’s Monmouth University.

So what do you think? Should the minimum wage be raised to $10 in the U.S.? Leave a comment!