Minimum Wage Stunts Job Market

Minimum Wage Stunts Job Market Recovery

The complexity of our economic situation lies in the fate of the United States Government's ability in finding a solution to increase the employment rate. Our entire economy is based on the circulation of our money - the give and take of providing jobs that pay employees, which let those employees pay other employees for their goods and services. It is a ripple effect, based on the ability to supply jobs for people. Of course, people need to earn the right amount in order for this effect to work and have a well-balanced economy, which is where minimum wage comes in handy. However, if the minimum wage is set too high, employers will not be able to afford having many workers in their company, particularly within smaller companies. Considering our country's current economic situation and unemployment rate, people need to take into consideration whether the minimum wage is part of what is stunting our job market recovery. In my own opinion, considering the researched data, it definitely seems that minimum wage does indeed have a negative effect on our job market recovery.

High-paying positions are not exactly affected, if at all, on the rise or fall of the minimum wage. Companies that pay their employees based on a salary do not need to consider the current minimum wage. However, the jobs that require individuals to do the manual labor, and that do not require an education depend on the minimum wage. So, having a sudden rise in labor costs will greatly please workers, but definitely disappoint employers. As was mentioned in Buy Like Buffet in 2009, the companies that offer customer service are affected the most, particularly when there is a raise in minimum wage: "… the minimum wage increase will hurt individuals seeking employment in lower level jobs the most... Consumers will have to pay more for goods and services at a time when money is already tight." (http://buylikebuffett.com/index.php/tag/minimum-wage/). It is the companies that can only afford minimum wage that will feel the hit during years when the minimum wage is raised. If it likely that a higher minimum wage will stunt the job market, then that just shows that minimum wage has a definite affect on the job market.

An article by the Wall Street Journal reported that in April, "…figures last week show the June unemployment rate hit 9.5%. Consumer confidence, consistently low, retreated in June, translating into weak traffic at restaurants, car washes and hotel, all places that rely heavily on minimum-wage workers," (http://online.wsj.com/article/SB124684183990798403.html).The economy is based on giving and taking money between consumers and industries -supply and demand. Watching a decline in the demand for goods and services hurts the smaller companies, which in effect causes lay-offs.

Observing the effect minimum wage has had last year shows the direct impact on the economy minimum wage has, which is why some people look at a rise in minimum wage as worsening the economy. However, the Economy Policy Institute claims that, "In general, there is no valid, research-based rationale for believing that state minimum wages cause measurable job losses." 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. Despite trying to remove blame from the minimum wage, the coincidence of these states with the highest minimum wages that also have the lowest employment rates -- Alaska, Washington, and Oregon -- seem too much of a coincidence to ignore. If there was no link from the minimum wage to the unemployment rate, then why are so many companies outsourcing?

Many companies, big and small, are looking to make extra money by outsourcing positions in other companies that do not require a minimum wage for workers. Companies do not have to spend as much money on employees from other countries. Regardless of whether this tactic, conducted by these greedy or struggling companies, is fair to the hardworking American workers is beside the point. Saving money through outsourcing, in effect, deprives American workers of more jobs. Fewer jobs are available here because those positions are moved to other countries.

In another article by the Wall Street Journal, people believe that one way to fix the economy is by having people spend more: "…the point now is to stimulate the economy by increasing consumer 'demand,'" (http://online.wsj.com/article/SB10001424052702303348504575184802145949666.html?KEYWORDS=minimum+wage+job+market) However, it does not seem likely that this can be done when people do not have the money to spend in the first place.