You don’t need a degree in economics or to be a Republican to understand why increasing minimum wage in is a bad idea.
Minimum wage is a good idea in theory, but basic economics laws show that price floors cause surpluses, which, when the product is labor, equals increased unemployment.
In other words, if the government says the minimum price of all labor is $2 an hour, then everything that takes an hour to make costs at least $2, and if you raise the base price of labor to $5, you’ll see a general rise in prices, also known as inflation.?As of Jan. 1, if you are a server in North Carolina you now make $3.13 an hour, and if you made minimum wage before, you now make $6.15 an hour. For people who are trying to live on minimum wage, the $40 increase in income per week is not going to significantly improve their quality of life.
It’s simple: If the price of orange juice goes up, people buy less orange juice. It’s the same with labor. So, even though raising the minimum wage gives five people an extra $40 a week, the sixth person is fired. It’s not fair to give a few people higher wages at the expense of taking income completely away from others.The earned income tax credit helps with letting low-income workers keep the money they earn, and it doesn’t create negative effects for other low-income workers. There are so many better solutions than raising the minimum wage.The idea behind a universal living wage is that we should set the minimum wage high enough that everyone who works can afford a decent standard of living, and maybe support a kid or two — maybe even have access to health care.
It depends on whom you ask, but a living wage is typically in the neighborhood of $7.50 to $12 dollars an hour. The goal is for everyone to have a shot at the American dream.??Of course, nobody should be opposed to reducing poverty – but I believe that minimum wages set close to the “living wage” are so economically unreasonable that low wage earners would be worse off with them than without.
The most effective argument I’ve heard for an increase in the minimum wage is that the labor market for low wage earners is not perfectly competitive.??In the skilled worker market, if an individual feels he or she is not being paid enough, they can quit and seek another job.??However, a worker in a minimum or near-minimum wage job often can’t afford to quit his or her job in search of a slightly higher-paying one.??Sometimes the realities of poverty hold them firmly in place.??Maybe you can type fast enough that you can be hired for a data-entry job, but you have no car, there’s no public transportation and the fast-food place where you work is the only job you’re qualified for within walking distance.??Your employer knows you’re stuck. The market isn’t perfectly competitive, so it can pay you less than you deserve without losing you.??But this argument about the noncompetitiveness of the labor market is really only applicable to small increases in the minimum wage; it doesn’t apply to proposals to raise the minimum wage to a living wage.??This stance also ignores the nature of a capitalistic economy. If an adjustment in the minimum wage does go off without any noticeable consequences, the number of people who actually earn a minimum wage still won’t be any different.
Not to mention, I, like plenty of other students, have a part-time job for extra money – not to live off of. Not all people are living off of their minimum wage jobs, and there is no way to differentiate wage increases between those who actually need them and those who don’t.?One thing is for certain: low-wage workers better hope that Democrats stop trying to “help” them.