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Should We Raise the Minimum Wage?

8/1/2014

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PictureCredit: obamacartoon.blogspot.com
The debate has raged for the last 2 years, should we raise the minimum wage or not?  Among those who are championing the proposed hike to as much as 15 dollars an hour is those whom say they cannot afford to raise a family on $7-8 dollars an hour. So let us examine what the statistics say about this.  According to the Bureau of Labor Statistics: "Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 12 percent earned the minimum wage, compared with about 1.2 percent of workers age 25 and over."

So let me get this straight. We are going crazy doing verbal and intellectual somersaults over 1.2 percent of adult workers? 

According to the  Indianapolis Star, The minimum wage isn't working for Chaneice Coleman. "I have two kids of my own, and I've got bills to pay," said Coleman, who now works at another fast-food restaurant. (not McDonalds) "Getting paid $7.25 an hour is not cutting it."  This quote and article in the star refers to the recent ruling against McDonalds. So, that is my fault? I am failing to understand why we are considering raising the minimum wage to 15 dollars an hour. Many skilled workers make $13-$15 an hour, and you want unskilled workers to make that?

In the world of economics it is very simple, you are what you eat. That is you are worth what you can produce. The 3% of adult workers who are making the minimum wage, do not have any skills. Furthermore, many of those whom are unemployed, cannot find work because they are not worth $7.25 an hour.  You might say that is harsh, I call it a dose of realism.  The purpose of minimum wages jobs is to allow inexperienced workers to gain experience. Once the worker has the requisite experience, he/she can move on to a higher paying job. Those workers, like Ms. Coleman, who say they need a $15 dollar an hour wage to raise their family, are unfortunately not skilled enough to demand those kind of wages. In addition, if the MINIMUM wage is set at $15 an hour, what happens to the incentive to better ones self? Well, the incentive to gain more skills runs out the door and the incentive to become educated is driving the getaway car!

But wait!  Things are getting worse in this country! We must stand up and fight against the greedy business owners!  Wrong again. According to the BLS: The proportion of hourly paid workers earning the prevailing federal minimum wage or less declined from 5.2 percent in 2011 to 4.7 percent in 2012. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis.

Here is my final answer. We should not raise the minimum wage. If we do it will price young and inexperienced workers out of the market and will not allow them to gain the necessary experience they need to garner higher wages.
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Is Wal-Mart the bad guy?

3/13/2014

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How Wal-Mart is the good guy
They have low cost goods for the community to purchase.


They provide jobs in the town they build a store


They contribute a lot to the economy through property taxes.
Picture
How Wal-Mart is the bad guy
Those low cost goods come from China, where workers are not paid very much

The so called "Wal-Mart effect" destroys mom and pop business in towns where they build a store

They create low paying jobs which many claim contribute to the income inequality issue
The list above is very simple and not exhaustive. However, it does start the debate as to who is responsible for the well being of our countries workers.  Is it corporations like Wal-Mart?  Is it their responsibility to create high paying jobs? I would argue that those whom work at Wal-Mart as free to leave and go to a different place of employment I they are not happy with the wages. The contrarian viewpoint to this article is that those workers are stuck in low paying jobs where they have no chance for advancement. What is your opinion? Does Wal-Mart have a higher responsibility to its shareholders, customers or employees?
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Are There Any Good Reasons To Raise the Minimum Wage?

2/26/2014

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PictureCredit: Dambreaker.files.wordpress.com
In the interest of fairness, I will examine the (possibly) good reasons to raise the minimum wage.  I think we would all agree that helping people rise out of poverty is a virtuous thing. So...please make sure your tray tables are in their full upright position and away we go!

CLAIM
A higher Minimum Wage will reduce the number of people in poverty.



If we accounted for inflation...the minimum wage would be at $10.10







The following is a quote from president Obama. "I’m going to keep pushing until we get a higher minimum wage for hardworking Americans across the entire country. It will be good for our economy. It will be good for our families,"


Picture
Credit: Streethypenewspaper.com
RESULT
According to therecent report from the CBO, only 19 percent of the benefits of this increase will go to households in poverty.

Actually, not really. If the wage had risen along the years so would have other PRICES, a wage is a price. The subsequent rise in prices as a whole would trigger inflationary pressure and this would have caused a contraction in the job market.


It is true that if you put more money in the pockets of low-income workers, they tend to spend it. However, According to the CBO, and as we said in ourearlier post, this will also cost jobs. Between the job loss and inflationary pressure this increase will cause, the benefit to the economy would be negligible.

Quite frankly, the breakdown of the family structure is what causes the need for low skilled workers to have their pay artificially raised. What would be good for families, would be if we had more jobs. Michael Strain puts it this
way
: “Hundreds of thousands of low-skill workers are trying to
find a job but can’t. Is it really the right time to raise the cost of hiring
and make it harder for businesses to hire them?
Overall, what little bit of good is done by the increase in minimum wage, is overshadowed by the unintended consequences. According to Jeffery Dorfman, "If the aim is to redistribute income without people noticing because the government role in the process is once removed, raising the minimum wage might be a good choice. However, if the goal is to help workers in or near poverty to earn a better living, the policy fails due to its poor focus and extraordinary cost relative to the reduction in poverty. We can do better by poor workers than this."

Please feel free to chime in with your own opinions below
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(MORE) Reasons not to raise the minimum wage

2/18/2014

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PicturePhoto credit: Blog.Mlive.com
Well here we go again. The CBO, (Congressional Budget Office), came out with a report that says raising the Federal Minimum Wage to $10.10 an hour would lift 900,000 people out of poverty. Awesome! Less poor people! Well, there is one problem. There are 45 million people that will be below the poverty line this year so this is barely a 2% decrease in the amount of people in poverty.  Why not do it you ask? Because that same report says raising the minimum wage to $10.10 an hour would cost 500,000 jobs!. That means there will not be as many people available to pay for the goods these minimum wage workers are producing.

We had an earlier post that explained in detail how raising the minimum wage would cost jobs

We would love to hear your comments on this! Make sure you respond below

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