Friday, December 13, 2013

Power of Minimum Wage

By: Amanda Dabney

Work… if we are all honest with ourselves there are at least a hundred different things that we would rather do than be at a job. Unfortunately though, earning money is one of those necessary evils that we all must go through in order to survive and thrive. I myself have two jobs, and I know that at both jobs I desire to be paid just a little bit more, as I am sure many others would concur. However, the amount that I am paid is a direct reflection upon the current level of minimum wage. Across the nation, minimum wage has become a heated topic; advocates argue that the wage must be raised from its current level of $7.25, in order for people to make it in this world.
(http://staffingtalk.com/wp-content/uploads/2013/12/minimum-wage-protesters.jpg)

In terms of economics a marginal worker is paid based on that workers marginal productivity. Basically minimum wage impacts the unskilled worker, which tends to be teenagers and most non-college graduates. Raising the wage will therefore decrease the employment of unskilled workers. Utilizing the law of supply and demand it can then be inferred that the raising of minimum wage will lead to the excess supply of unskilled labor.  This concept is explained further in this video.


<iframe width="560" height="315" src="//www.youtube.com/embed/siW0YAAfX6I" frameborder="0" allowfullscreen></iframe>

However, what if this widely accepted theory about the raising of minimum wage and its disastrous affects was challenged?
Britain is a country that we need to examine in order to see how raising minimum wage does not necessarily mean bad things. In fact, if the way that the wage is raised is designed in a clever enough matter employment could increase or at least stay constant. The wage in Britain is raised based off of what a Low Pay Commission committee compiles. This committee has been able to increase the pay for the workers steadily each year without having affects on their employment.  In general, this would mean that the employees have taken to getting a higher level of education and working harder.
Now, this sounds so perfect in theory, however there are downfalls to the constant raising of the minimum wage level. Technology is always a changing factor in economics. Usually, technological advances allow for a greater output at a lower cost to be achieved. If the wage level of workers continues to rise, eventually a point is going to have to occur where the price of investing in a labor that is more productive is going to exceed the price of automation.  Although, we all would like to think that robots could not do our jobs, the sad truth is that machines have already replaced many jobs humans once held.  For instance, I’m sure most of us have heard about the new Amazon delivery system. Basically, in the near future Amazon is going to have robot machines that fly packages to houses. These machines are going to eliminate many jobs but in the long run it will leave Amazon more profitable.
Minimum wage is therefore a very tricky concept. Raising it too much will entice companies to just get rid of the human burden, but not raising it all will leave many unskilled workers without a will to work or financial stability. As politicians and people across the nation continue to argue about it, the hope at this point must be that a careful system, like that of Britain, be created. One in which the wage does not skyrocket, yet the new level satisfies the majority of workers.

Works Cited






5 comments:

  1. Personally I do not believe the minimum wage should be raised, ever. We all know in order to get a nice paying job that requires a good education, now I understand not everyone can afford college but there are ways around that. Increasing the minimum wage price would just create more lazy people and people who believe if they can live off minimum wage, then why go to college? I also believe minimum wage paying jobs are mainly for teenagers who are saving up for college, a car, gas, spending money ect.

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  2. I definitely believe that minimum wage should be stayed at what it is currently because even though it may benefit some of the lower class over all it will hurt the majority tremendously. The reason why I say that is because raising the minimum wage forces prices to go up because of inflation occurring due to the raise in minimum wage. For those individuals that are set on a base salary, they would be affected by this the most (mainly the middle class) because their salaries would not be altered in reference to the change in prices. Since this statement is proven to be a factual cause of altering the minimum wage, I believe most certain that minimum wage should not be changed even if it may support a small percentage of the population.

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  3. It is a burden on those workers that are not able to provide enough toward their families due to the minimum wage, but raising the minimum wage can (and will) affect everyone else in the future. I know that some people are not able to receive higher education due to financial problems, but if people want a higher pay they must work for it. They need take the time to absorb the education needed for the “better” jobs in order to work for the better pay.

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  4. Your first sentence is wildly inaccurate, there are at least 200. Also, you bring up a great point throughout the entire argument; the balancing of minimum wage with employment. As we're taught about supply and demand curves, you'd see that it would be impossible to achieve both in positive light, but you demonstrate not only an idea of how it could work otherwise, but also an example of Britain.

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  5. I never really thought about the negative effects of raising minimum wage. I didn't really see it as making employment decrease and that would most likely make things worse depending on many factors. People that don't go through college would have a chance of not even having a job anymore and I can't even imagine what would happen to high school dropouts. Everybody would need to be very educated to excel at all or even survive. But on the other hand, Britain does it so why can't we?

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