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Your Take: Should We Increase Minimum Wage?

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Minimum Wage SignIn President Obama’s State of the Union address last week, he talked about increasing minimum wage to $9 an hour over three phases. The last time minimum wage was increased was in 2009 (effective Jan 1, 2010) when it was bumped up to $7.25. Even bigger was the call to tie minimum wage to inflation, which is something we should do for everything (didn’t we learn anything from AMT and the million other non-inflation indexed numbers?).

I get the argument against raising minimum wage, it hurts job creation and increases costs. When you increase labor costs, businesses don’t hire as many people if they want to keep the same profit margins. You don’t automagically earn more when you add employees and you certainly don’t earn more when you simply up their pay. Business owners don’t like minimum wage increases because anyone earning minimum wage get’s a bump and it comes straight out of profits.

The problem is that minimum wage isn’t inflation adjusted. With every passing year, the minimum wage actually falls in terms of purchasing power. $7.25 in 2009 has the same purchasing power as $7.76 today. Go back farther and it’s even worse, that’s the painful magic of inflation.

What do you feel about minimum wage? Should it get increased or is it fine where it is? Or should it not even exist in the first place? Shouldn’t we let the markets determine what is a fair wage?

(Canadian! Photo Credit: mag3737)

{ 50 comments, please add your thoughts now! }

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50 Responses to “Your Take: Should We Increase Minimum Wage?”

  1. DIY Investor says:

    The minimum wage should be done away with. It especially hurts young people. Teenagers have an unemployment rate exceeding 25%. Remember: to be counted as unemployed you have to be looking for a job. The opportunity to learn how the job market works is lost on teenagers out of work. Does it make sense for people to make considerably less than the minimum wage by getting unemployment benefits? Also, know that the wealthy get around the minimum wage with internships.
    It is another area where those who have an urge to help others are actually hurting them IMHO.

  2. cubiclegeoff says:

    It should be adjusted to inflation. It’s silly that it isn’t in most of the country.

    I’m on the fence about increasing it though. I think every business has the right to earn money, and those people can get rich. But I think there’s too much of a sense of self-interest that has led people to want to get rich off the backs of others who are not benefiting fairly for their work. Sure smaller margins may not give a business owner as much profit, but there’s a lot to be said for having happy employees and a larger society that benefits.

  3. Glenn Lasher says:

    If we are going to have one, then yes, it should be raised and tied to inflation, else it has missed its purpose.

    I think, however, that it may be the wrong question. The minimum wage puts a restrictrion on the market that helps the working poor in some ways, but is posited to hurt them in others (what good is a minimum wage if you can’t find a job?).

    What we need to do is strengthen the job market. To that, we must strenghthen the market for American goods. To do that, we must *make* American goods, and they must not suck.

    Want to put restrictions and limits somewhere? Kill the free trade agreements, and tax the living crap out of imports. Yes, life will cost us more *money* but I believe we’re paying a price that is worth far more than that.

  4. Scott says:

    I wonder sometimes if these cries for increased minimum wage are because we are slowly killing off unions that used to fight for the “underrepresented” and keep wages fair. To be clear, I am generally against both minimum wage and unions (let capitalism live!). But I understand how they came to exist and maybe they are necessary evils. Or maybe we need to revisit why we have them in the first place and decide if we really need to keep them.

    I don’t understand how this push to increase minimum wage plays with the new immigration laws being pushed around. If we allow a lot of less-than-minimum-wage workers to become citizens but then their wages skyrocket as a result, aren’t we just asking for more unemployment?

    • NJBlue82 says:

      Scott, your clear and concise logic is not appreciated by the career-bureaucrats in Washington, most of whom have never had a private-sector job.

      In the future, please refrain from “thought” and instead “feel” your way to the most politically-expedient answer. Thank you.

    • M Evan Reindl says:

      A lot of union pay is based on the minimum wage. Mr. Kenya is playing to the unions by increasing the minimum wage.

  5. Squeezer says:

    I think the minimum wage should be abolished. It only hurts workers on the low end of the pay scale by setting a minimum pay instead of being paid what your value is. I think there will always be low paying jobs in society for two reasons.

    One is oversupply of labor. It does not take much in the way of an education to be a gas station attendant or a garbage man, and there are plenty of people in society, so jobs like these do not have to pay much because there will always be a line of people willing to work for little pay.

    The other is, if everyone was making $60,000 a year, even waitresses, than your meal would cost $200, which means my pay would have to go up to pay for the meal, resulting in society’s purchasing power remaining the same, and any benefits to higher pay eaten up by inflation.

  6. Wil says:

    I think the “minimum wage” serves no useful purpose. The market will find the appropriate level without government intervention.

  7. Daniel says:

    We should eliminate the minimum wage, because price controls always and only cause shortages. In this case, the minimum wage causes a shortage of low-wage jobs.

    Put another way, if $9/hour is good, why not $99/hour, or $50,000 an hour? It’s easy to see how absurd it is when it’s crazy high. It is just as absurd when it is low. The problem is that its sinister effects (elimination of low-wage jobs) are difficult to observe, so casual observers tend to not understand those effects.

  8. NJBlue82 says:

    Minimum wage is a “good news, bad news” proposition for unskilled laborers: Good news is that if they had a job, they’d make $9/hour. Bad news is that businesses get a vote and won’t hire someone for $9/hour to do a $5/hour job.

  9. sohaila says:

    yes l do agree on bringing the wages up and lowering the wages of everyone affiliated in the capitol building. Tbey make too much money for what they supposedly do.

  10. David S says:

    Another way minimum wage backfires is by making it more economical to pay for automation of low skilled jobs. (Note the numbers are for illustrative purposes only and not realistic as far as I know) If is costs $350,000 to buy a computer that will drive around and pick up the trash and it will last at least 10 years then it costs roughly $35,000 a year. If you can hire 2 guys to do the same thing for 30k (2 * 7.25 * 40 * 52) but increase the min wage to 9 and it changes to $37k and now you are saving 2k a year. Now the computer took over the job permanently and you have increased unemployment by 2.

    • Texas Wahoo says:

      There is an obvious solution to that problem – put minimum prices on computers.

    • MikeZ says:

      I’d say that isn’t quite true. You also paid $350,000 for a computer which went to the pocket of a guys who built you a computer. You are trading fewer higher skilled jobs for more low skill jobs but the increase isn’t exactly 2.

  11. Severn River Mike says:

    Pure capitalism gets you exploitation and needless human suffering. Imagine trying to survive on the minimum wage! You can’t. You ‘market solves all ills’ folks enjoy weekends off, vacations, benefits and much more because unions and government, yes government, have done the heavy lifting to get the super-rich to trickle a little on you. But you are willing to kill the minimum wage. I don’t get it.

  12. The entire goal of minimum wage is to set the lowest bar for earning a living and should be tied to the consumer price index. It’s an issue of social and economic justice: Do we want a society that intentionally allows people to work full time and remain in poverty? There is dignity in all work and the rewards of that labor should reflect that in a lifestyle that, while meager, isn’t poverty.

    • Mirinda Schiele says:

      Yes! Thank you for saying what I was thinking. If you work 40+ hours a week and still can’t feed your family are you more than a slave to society? And if your employer doesn’t pay you enough to take care of your family then what am I really paying for that burger? Six dollars plus food stamps, plus health care, plus head start, plus, plus, plus… Trust me- Mrs. Burger flipper would rather earn a living wage and buy her own food, healthcare, daycare, etc.

      • Nick says:

        Minimum wage is not only for full time jobs.
        It effects even hourly wages.
        If you want to set a minimum full time wage, fine. But then companies will respond and hire more part-time employees (e.g. Dunkin to get around health-care laws).

  13. Scott says:

    Unions support the minimum wage for one reason – it keeps low paid competition away from their people’s jobs and keeps union member wages high. Unions don’t have members making anywhere near minimum wage, so why support it? Why do they care? Easy, keep lower skilled workers from gaining lower paid employment and earning skills on-the-job and working their way up the chain at a lower pay scale.

    Union bosses could care less about the “under-privileged”. They care about eliminating competition.

    The problem with the minimum wage argument is that it is another “emotional” position where facts don’t win, only emotion. Anyone against raising the minimum wage can easily be portrayed as heartless and uncaring for those who earn the least………… except the irony is that the minimum wage hurts many more poor people than it helps……….

    You just can’t interview the person who didn’t get a job because the minimum wage is too high. You don’t know who they are. But you can interview plenty of people just getting by on the current minimum wage.

  14. M Evan Reindl says:

    YES. Raise it to $500/hr and we’ll all be millionaires. Problems solved.

  15. Demi says:

    I think this is really a unique question. And depending on who you ask you will end up with yes and no and a hundred reasons why. Someone who is not schooled in a low paying job will say…yes! $9 an hour! Because they need the money to expand their lifestyle. Someone who owns a business would say no! and do away with minimum wage all together so they can pay sub-par wages…or hire illegals for $5 per day (don’t tell me it does not happen…businesses in my state are getting busted often for hiring and paying illegals). Me, as an educated and average paid worker…I would really have to sit down and think about the correct answer…if there even is one. Right now those that make minimum wage, their pay is offset by taxpayer funded free-bee’s; health care, transportation, education, food, rent, cell phone, electric, heating oil, the list goes on. So in reality…the $7.25 an hour does not mean much. I know a woman on welfare who actually makes $40,000 a year in ‘in kind’ support when you sit down and count up her costs. On the opposite side…the business that would do away with minimum wage have just as many loopholes and IRS gifts to use to their advantage. I have always been one for a flat tax across the board…and EVERYONE pays taxes. I don’t care if you make $5000 a year collecting welfare, you pay tax on it. No loopholes. A two page Tax form. Period. How much did you make? This is what you pay. Part of the reason our nation…our world…is screwed up is because of the constant dicking with the tax code. Greed has become the new God for way too many today.

  16. Cal says:

    I think we need a “living” wage like they have in other countries…. If you are a teenager you make X for your pay no matter where you work (McDonalds, Car Wash, Retail, ETC) since you most probably live at home and don’t have to foot a lot of bills.. If you are an adult either single or with a family then you make a living wage no matter where you work so that you can live… The minimum wage system is a joke.. States DO NOT have to follow the Federal guidelines as they have their own and some states have lower minimum wage than others….

    • Beankounter says:

      Why not just set the prices of everything low enough so that $9 an hour can feed a family of four and have enough left over for a European vacation?

    • MikeZ says:

      I think you have that partially backwards. States absolutely do have to follow the Federal minimum wage laws, but some states do have a higher minimum wage than that guideline suggests.

  17. Fabclimber says:

    I wonder what the minimum wage is in China and other asian countries where all our jobs have gone.

  18. It should be at least tied to inflation. Social security is, why shouldn’t minimum wage.

    • Beankounter says:

      But they don’t count the cost of gasoline or groceries in the Social Security Cost of Living adjustments.

  19. Mark says:

    People need to eat, pay bills, take care of their kids, etc. I guess people who don’t want to pay more than $5/hour only want children who live with their parents working at their businesses.

  20. admiral58 says:

    We should not increase minimum wage. Keep it as is

  21. SLS says:

    Yes, absolutely, we must increase the minimum wage so that people can earn a living wage and support themselves and their families!

    It is absolutely appalling that people can have a full-time job and not be able to pay for health care, food, shelter, and the basics of life because they earn too little money. We have a huge population of people living in poverty because the minimum wage is too low and there is vast unemployment and underemployment. More than 20% of all children in the US live in poverty right now.

    Capitalism and the market system is not the answer; it will always keep some people impoverished, which is simply inhumane.

  22. bloodbath says:

    I’m not sure if it should be raised at this time, there are too many layoffs and too few job openings

    The last time businesses were allowed to monitor/police/regulate themselves we saw massive foreclosures and an economic downturn. Most business will not voluntarily pay a living wage.

    There should be a minimum wage, without one the poverty level will be lower and more Americans will qualify for welfare.

  23. Shirley says:

    Since we have a ‘minimum wage’ perhaps a ‘maximum wage’ would be in order.

  24. xbalance says:

    I don’t like wage setting and I reaslly don’t like greed and exploitation. Since people earning low wages most likely also take advantage of social safety net services, we could investigate a tax on the employer based on the gap between the wage they pay and the services then made eligible to the employees.

  25. I have sympathy for those who work hard and still aren’t making a decent living.

    However, I don’t think raising the minimum wage would solve anything.

    First of all, there have been studies done that show increases in minimum wages actually increases poverty levels. If a company has to pay more per employee, than they will most likely have to lay off employees. This just causes more unemployment, which we really don’t need at the moment.

    Another problem that a lot of people don’t mention is, you would probably have to raise the wage of other workers as well. For instance (just an example) if a medical assistant now makes $12.00 an hour, and the minimum wage is raised to $10.00, they are only making $2.00 more than minimum wage. It would make many fields very uncompetitive, and people will be less likely to go to school for them. There is a whole slew of occupations that take a little bit of schooling, that pay just above $10.00 that would be in shortage if people were unmotivated to go into these fields.

    I think we want easy answers for difficult problems. There is more to poverty than the minimum wage. If we focused more on education and motivation in children before they even hit the workforce, a lot of issues would be non-exsistent.

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