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2% of minimum wage earners are household heads and only 2.8% of low-wage earners are single parents.
If we assume that companies will even out productivity in the long run via the means above, then the largest impact will be on net employment. In many parts of the U.S., companies that employ workers at minimum wage levels are perpetually hiring - they cannot fill positions at these wage levels. The impact of the economy overall is minimal as well, because the lowest-income workers contribute little to the economy.
Ultimately, increases in the minimum wage are good for the economy. Proponents of minimum wage increases may be wrong about the advantages to the most vulnerable of wage earners, but overall such increases force companies to increase efficiency in other areas, rather than merely relying on a cheap labor pool for productivity. The worst of the workers get flushed from the workforce and replaced with better ones who rejoin the workforce because of the higher wages. But many of the worst are teenagers, who will inevitably find other jobs sooner rather than later. Opponents of higher minimum wages fail to demonstrate...
In addition, they lean too heavily on the assumption that low-wage workers can be easily replaced by overseas workers or machinery. Given that the biggest employers of minimum wage workers are service sector industries and farms, these scenarios are implausible. Therefore, reasonable increases in minimum wage, in particular cost-of-living increases, have a net benefit to the economy.
Works Cited
Deere, Donald & Murphy, Kevin & Welch, Finis. (n.d.) Sense and Nonsense on the Minimum Wage. Cato Institute. Retrieved June 15, 2008 at http://www.cato.org/pubs/regulation/reg18n1c.html
Saxton, Jim. (1996). The Case Against a Higher Minimum Wage. Joint Economic Committee Report. Retrieved June 15, 2008 at http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm
Deere, Donald & Murphy, Kevin & Welch, Finis. (n.d.) Sense and Nonsense on the Minimum Wage. Cato Institute.
Saxton, Jim. (1996). The Case Against a Higher Minimum Wage. Joint Economic Committee Report.
Works Cited
Deere, Donald & Murphy, Kevin & Welch, Finis. (n.d.) Sense and Nonsense on the Minimum Wage. Cato Institute. Retrieved June 15, 2008 at http://www.cato.org/pubs/regulation/reg18n1c.html
Saxton, Jim. (1996). The Case Against a Higher Minimum Wage. Joint Economic Committee Report. Retrieved June 15, 2008 at http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm
Deere, Donald & Murphy, Kevin & Welch, Finis. (n.d.) Sense and Nonsense on the Minimum Wage. Cato Institute.
Saxton, Jim. (1996). The Case Against a Higher Minimum Wage. Joint Economic Committee Report.
The company can also allow a position to go unfilled for a time to increase its leverage; the unskilled worker would starve trying to stall for a higher wage. This again invalidates the argument that the free market can set wages effectively -- it cannot given the imbalance of bargaining power between workers and businesses. The minimum wage serves a specific economic role of balancing the bargaining power between
Minimum Wage Even though minimum wage has been around for many years, and was established to make sure that working people could survive and pay their bills, there are still many problems with it. This paper address both the pros and cons to raising the minimum wage, discussing not only how people can be helped by the increase in pay, but also how they are ultimately hurt by it to a
Only 2.1% of minimum-wage workers belong to a union, versus 12.0% of the overall working population. Nonetheless, labor unions fight passionately for a higher minimum wage (Sherk). When the minimum wage rises, it becomes more expensive to hire unskilled workers. This makes the decision to employ highly paid and highly skilled workers, instead of unskilled workers, more attractive to businesses, and so businesses want to hire more skilled workers (Sherk). With
This creates a knock-on effect wherein this spending fuels hiring at other companies, whose workers also spend. In contrast, the additional profits earned by corporations as a result abolishing the minimum wage could be invested anywhere in the world and capital gains from stock price improvements are taxed at a relatively low rate. Without a minimum wage, there would be more Americans working, but they would not make enough
Minimum wage laws have always had a high price to pay. Essentially, there are a number of costs associated with governments implementing minimum wages on an otherwise free labor market. First, there is the issue of reconciling increased labor costs with static production profits. According to the research, "Minimum wage increases make unskilled workers more expensive relative to all other factors of production," (Gorman 2008). The increase in wages can
" However, the theoretical evidence that is provided in this article, to disprove other people's theory on the impact of minimum wage on the economy, seems to have the opposite effect. Statements about the, "…simplistic observation that some of the states with high minimum wages also have high unemployment rates," (http://www.epi.org/publications/entry/briefingpapers_bp150) are not completely disproved with the evidence provided to show no correlation with minimum wage and the job market.