About Negative Effects on Minimum Wage
The amount of money a person is paid should be based on their skills and knowledge, not on what the government decides is fair. Raising the minimum wage does not make that worker more valuable to an organization, it only makes him more expensive. Much of the workforce feel like they are being paid unfairly and want to see their wages increase dramatically. This would cause the opposite effect of what they think would happen and will be a lot more harmful than helpful. There is also a small number of workers that are even paid the minimum wage. According to the Department of Labor’s Bureau of Labor Statistics, the percentage of hourly paid workers earning the prevailing federal minimum wage or less declined from 2.7 percent in 2016 to 2.3 percent in 2017. Increasing the federal minimum wage would increase the cost of living, cause workers to lose ambition in bettering themselves for a higher paying career, and eliminate many jobs.
Franklin D. Roosevelt first introduced the idea and the minimum wage was enacted by Congress under the Fair Labors Standard Act (FLSA) in 1938 (Seltzer 1302). The purpose of the minimum wage was to stabilize the post-depression economy and protect the workers in the labor force from many of the harsh conditions they were in (Seltzer 1303). The first minimum wage was $0.25 per hour. Today, the federal minimum wage is $7.25 per hour, but twenty-nine states have minimum wages that are higher. Support for the minimum wage is premised on its improving the lives of those most vulnerable in the labor market. If a minimum wage leads to job loss for many of those same people, serious questions arise with respect to its relative benefits and costs (Belman and Wolfson 21).
How it works
Proponents of the minimum wage increase argue that the minimum wage has not kept up with inflation. The problem with this argument is that with the rise of these wages, inflation is going to increase. First, raising the minimum wage would increase the cost of goods and services. Many companies are already on tight budgets and have small profit margins and increasing their employee expense will only make things worse. These businesses will have to find a way to overcome this added cost by passing it on to the consumer. This would mean that everything from groceries, clothing, and other everyday essentials are going to take out a bigger percentage of an individual’s paycheck. This will give an individual not only less money to spend on less vital items, but will also make it a lot tougher to be able to save money. The decrease in this extra money will also hurt the service business. The cost of services is going to rise so people are going to have to do a lot of things themselves instead of paying somebody to do it for them. In turn, this would put a major reduction in the service worker’s pockets.
This increase is not only going to cause prices and rates to rise, decreasing a consumer’s spending power, but it also is going to disinterest some of the youth and lower skilled workers to further their education and skill levels to seek better career opportunities. If the minimum wage was increased to fifteen dollars an hour, like many people think is fair, the number of students attending college would decrease significantly. This group of people would feel like this wage would be able to provide everything they need, instead of wanting to make more money and have more financial possibilities. These workers would also lose ambition in increasing their skill set. Many of them would settle for the lower skilled jobs because they are content with that wage.
Advocates of increasing the minimum wage state that it would raise the standard of living for lower income families. This could not be further than the truth. Harry J. Holzer claims on the online story A $15-hour Minimum Wage Could Harm America’s Poorest Workers In job markets where young or less-educated workers already have difficulty finding jobs and gaining important work experience, such mandates will likely make it much harder. Many members of the lower income families have the lower skilled, minimum wage jobs that would surely decrease with the rise of pay. The companies would find alternative ways to produce goods and provide services which would make these jobs disappear first. This would force these workers to either further their education or increase their skill set, which could be difficult for many of these people. Needing to pay higher wages is going to force many corporations to start utilizing robots. Today, technology has made huge advancements in robotics and artificial intelligence (A.I.) and applying these to the work force will cause many positions to vanish. These human jobs have already been replaced and it is only going to get worse. Cashiers are already getting phased out by self-checkout lanes and with the dominance of shopping online, retail jobs are quickly decreasing.
These are all lower skilled positions meant to be lower wage jobs that would disappear to automation and machinery if the cost of an employee would rise. Many positions are also going to die out because the small business owners will not be able to pay as many employees and are going to have to take on more responsibility. Many of these owners and entrepreneurs rely on lower wage employees to perform the basic tasks to keep the organization running so they can focus on the more intensive tasks and future plans. This is going to put a major burden on these owners and it is going to make growth and expansion much more difficult and it may force many smaller businesses to close. The owners will also cut hours accordingly to