Should the Minimum Wage be Increased?
Perhaps one issue of concern to many is regarding the minimum wage hike. However, raising the minimum wage does not only concern the minimum wage workers but actually almost every person in the community, from the simplest unit such as the family to the whole community. It is not just a simple issue of increasing the salary of the employees but rather, a matter that the whole country is involve.
Raising the minimum would somehow ensure that the workers as well as their family will be able to live an easier life. They will be able to attend to the needs of their families with a greater salary thus, a greater chance of living a more comfortable life and access to necessities such as health care, education and the likes.
However, it is in the governments hand on whether or not to increase the minimum wage in their particular area of authority. Thus, the government itself considers the importance of having a minimum wage increase as well as the impact that it could bring to the country.
Most employees may affirm the raising of the minimum wage because of the idea that an increase in their salary would be helpful to their daily living. Who would not want a higher payment/salary anyway? It is basically the main reason of raising the minimum wage; to help the minimum wage earners or those in the lower class of the society. Even different labor unions are supporters of the minimum wage increase. Labor unions support the increase primarily because the increased in the minimum wage “will put a strong upward pressure on the entire wage structure” (Alesse and Gilbault, 2004).
It can be said that as time pass by, the cost of living also increases. Therefore, the wage of the workers should also be increased in order to compensate for the changes in the economic environment. Because of this, there had been many raises in the minimum wage of the workers in past years.
According to the United States Department of Labor, the minimum wage increases from time to time. In the Fair Labor Standards Act of 1938, the minimum wage is $0.25. After more than 50 decades, the minimum wage was reaches $3.8 which is very far from the years that past. Today, the minimum wage in the United States is $6.55, almost doubled from $3.8 in 1990. Thus, changes in the minimum wage of workers had been part of history and although there had been some transitions in the values (since there had been cases of reduction in the minimum wage in the past years.), increase in the minimum wage is more likely to happen rather than decrease minimum wage.
The issue of increasing the minimum wage has also been a long battle in the American government between the Republicans and the Democrats. The Democrats believed that raising the minimum wage is necessary for the country and the people to help those employees to live a decent life. They believe that it is something that the masses will benefit from and eventually, the country as a whole. On the other hand, the Republicans believe that raising the minimum will not be beneficial for the country since it will have other impacts to the country’s economy that outweighs its positive effects in the country such as the increase in the unemployment rate due to layoffs or company shutdowns.
The issue of raising the minimum wage is like a battle between the lower class in the country against those in the upper class; the employees against the employers. However, as mentioned above, raising the minimum wage is not only between the employees and the employers, it is a matter that will affect the whole country and thus, other factors must be taken account of. The government is definitely involve in the decision making process for it is responsible for the welfare of the people and of the whole state. It some instances, the consumers may also be affected due to some other effects of wage increase.
In a larger scope, society will greatly be affected by raising the minimum wage. However, it could either be a threat or an opportunity for the community. Raising the minimum would lead in income for the country since more taxes can be generated from the employees. On the other hand, increasing the minimum wage may also cause increase in the unemployment rate in the country. (US Department of Labor, 2008)
On the other hand, although the amount of wage increased by multiple times, there are still those who fail to support their financial needs. This also shows not only the minimum wage increased but as well as the market price of the products that increases the cost of living in the country. Therefore, an increase in the wage means also an increase in commodities and other things necessity in our everyday life.
Although, there are advantages of raising the minimum wage, there also disadvantages that that most employees fail to see because of the promising increase in their salary. Considering these effects, I believe that it would be better if the minimum wage was not raised. The threats offered by raising a minimum wage are far greater than the promises it offers to the people and to the community. An increase in the minimum wage does not only offer increase in salary but in personal expenses as well; an increase in the cost of products or services available in the market. So, would rising the minimum wage guarantee a life free from poverty? Although the minimum wage is increased, the amount required by an individual to live would also increase. Therefore, the increased in the wage will only be felt for a short period of time and eventually, the amount of things that can be bought by the past wage will only be equal to what can be bought if the minimum wages of the workers are increased. It would just be for the sake of formality but the condition of the workers is not likely to change. Therefore, the minimum wage should not be raised.
Perhaps business men are the ones that are the primary opponent of raising the minimum wages if they are not the only group since they are the ones that will definitely be affected in a negative sense. In terms of businesses, small businesses would be definitely affected in a larger scale that may even lead in some employees loosing their jobs. Raising the minimum wage would endanger small businesses that cannot afford to increase the wage of their employees. If ever the company or business continue to operate considering the increase in the wage of the employees, that particular business are likely to decreased the number of employees or to raise the prices of their products to accommodate the increase in the minimum wage. This is true especially in small businesses. Thus, the employees who desire increase in their wages can also be affected by the wage increase in a negative way together with the people in the community.
Increasing the minimum wage will increase unemployment since company’s are likely to hire lesser employees while some maybe forced to just close the business because of the inability to cope with the increase in the minimum wage. Inflation is another aspect that must be considered resulting from higher wages because companies will also tend to increase the purchase price of their products or services because of the wage hike. Thus, damaging those it (the wage increase) is trying to protect. It would be a big question whether a nation with high unemployment rate and loosing manufacturing jobs everyday would be able to afford the increase in the minimum wage (Alesse and Gilbault, 2004).
Although it can be said that the increase in the cost of a particular product can increase the tax revenue of the state, it is not always the case. This is because the demand for that product is likely to decrease (Alesse and Gilbault, 2004). Although the amount increases, the quantity of products taxable by the government decreases. Thus, it cannot be said that the increase in the minimum wage would generate greater tax for the government because of the increase in the product demand. Also, it is likely that the production cost of the product will increase that will cause a decreased in the production thus, also decreasing the tax revenue (Alesse and Gilbault, 2004).
Aside from direct economic impact, researches also showed that raising the minimum wage also has indirect negative impacts to the country. Increase in the minimum wage presents a greater chance and opportunity for the people and thus, the people’s eagerness to work also increases because of the increase opportunity to earn more. This can be considered a good effect since the motivation of the employee’s are increased. However, researchers from Michigan State University found that raising the minimum wage have a wider social impact, it encourage the teenagers to leave school and work instead (Alesse and Gilbault, 2004). This would be a problem to the country since the decreased in the number of skilled-workers who have college or master’s degrees will require the country to hire workers from other places or countries more suitable for the job. As a result, lower-skilled workers are being replaced by these students . This will really cost mush to business in the country and to the state as a whole. Thus, if minimum wage is increased, lower-skilled workers, whom raising the wage intended to help, are likely to lose their jobs.
Raising the minimum wage would greatly affect the life of people in the state thus; raising the minimum wage should be properly analyzed for those who will be much affected are the minimum wage earners themselves. Wage increase will limit the working opportunities available for low-skilled workers due to the high price of labor. The developmentally disabled persons, single parents, school dropout and immigrants with poor language and reading skills would be the most affected (Alesse and Gilbault, 2004) since a company would only hire a competent worker because of the high pay for the work.
Most economists also see the current economic status of the nation to be stagnant. Raising the minimum wage is likely to create layoffs or even close down in many small companies (The China Post, 2008). In New York, small businesses are struggling just to tide steadily against the rising costs of production. These businesses are really likely to close down if the minimum wage is increased once more (Alesse and Gilbault, 2004). What is needed is to reduce the manufacturing cost that will also reduce the purchase cost of the product in the market. Even if the minimum wage remains the same, those in the lower status in the community will be able to live a life free from poverty. Increasing the minimum wage will not solve the problem of poverty in the country; on the contrary, it may even add to the problem.
Increasing the minimum wage will have a domino effect in the community. Although the wages of the employees will increase, the cost of products in the market will also increase as well as the unemployment rate in the country. Higher pay also tends to give a notion that it is better to work than study thus, depriving the students from finishing their studies which is something that is of the country’s loss.
Increasing the minimum wage will not solve the country’s problem against poverty. It will not be able to give minimum wage earners security on their jobs. The main challenge in increasing the minimum wage is on whether the economic status of the state will be able to stand the negative impacts of raising the minimum wage because it might also hurt those employees who are intended to benefit from it as well as the citizen of the state themselves due to the expected increase in the products in the market. Thus, the minimum should not be increased for the negative effects outweigh its possible help to the minimum wage earners.
Alesse, M. & Guilbault, W. (16 February 2004). A minimum Wage Increase Will Hurt Small
Business and the Working Poor. Retrieved September 1, 2008 from http://www.gothamgazette.com/article/fea/20040216/202/871
The China Post. (17 August 2008). CLA Delays Call on Minimum Wage Increase. Retrieved
September 1, 2008 from http://www.chinapost.com.tw/taiwan/%20business/2008/08/27/171953/CLA-delays.htm
US Department of Labor. (2 September 2008). History of Federal Minimum Wage Rates Under
the Fair Labor Standards Act, 1938-2007. Retrieved September 1, 2008 from http://www.dol.gov/esa/minwage/chart.htm