A Case Against The Minimum Wage Essay — страница 3

  • Просмотров 628
  • Скачиваний 16
  • Размер файла 17
    Кб

these problems should the government raise the minimum wage so that consumers can purchase more and seek more alternatives. When minimum wages are raised business must compensate for the extra expenses incurred with the raise. Some businesses may reduce their work force to save money or they may charge the consumer more. The argument of advocates of the minimum wage floor that the firm can pass the costs occurred by the wage hike to its customers is not a valid one. Robert Shapiro, lead economist at the Progressive Policy Institute says that about 80 percent of the costs of an increase in the minimum wage are passed on in the form of higher prices. A survey of small businesses found that after a wage increase 28 percent raised prices, 26 percent postponed expansion plans, 14

percent terminated at least one employee, and 9 percent did two of the preceding. Many firms have also turned to automation to reduce the threat of wage increases. (Horwitz A4) The minimum wage laws do not alleviate low-wage and unskilled workers from poverty. They serve a purpose of keeping the poor people poor. The minimum wage laws make unskilled workers handicap forever by taking the element of incentive away from them. One’s labor is the most valuable property one has to sell. Variance in wages and earnings among workers at different levels of skill provide and incentive system of investment in skill acquisition. Different occupations have different wages. An interview with a small business owner in Cleveland revealed an interesting point. The owner stated that he would

rather employ one skilled worker that can do the job in one day than hire three unskilled workers that can do the job in one day. The reasoning behind this is that one skilled worker requires less monitoring than the unskilled workers. The extra money paid to the skilled worker is worth the time of training and monitoring the unskilled workers.(Interview) If minimum wages compress that spread and cause the differences between the wage rates in unskilled and skilled occupations to be too small, the average quality of the labor force is diminished, output is lower, and poverty tends to be intensified. The lower class makes up 16 percent of the population and represents the unskilled, poorly educated, and socially disadvantaged. This diagram shows that the poor in America are

getting poorer while the rich are getting richer. Average Income Average Income Percentage Change 1970 1993 1970-1993 Top 5% by income $87,018 $120,043 +40% Bottom 20% by income $18,301 $17,940 -2.0% A raise in minimum wages does not insure that low-income consumers will not be at a disadvantage. If minimum wage is raised then people are put out of work in the process of downsizing or replaced by more efficient machines. A few do make more money but that extra money is also taxed and businesses will have less capital to expand and hire more workers. Without the minimum wage raises businesses will expand because they have more capital. Along with this expansion businesses will hire more people and create more jobs, thus putting more money into the economy, which will reduce

inflation and keep prices on items relatively low. If businesses can not expand and can not afford to fire people then the businesses will raise their prices. The raised prices will hurt people working for minimum wage. Therefore when minimum wages are raised all the price of goods are going up so the consumer maybe making more money but is also paying more money for goods. Simply, the minimum wage floor is not a way to help the poor Americans.