As you may know, the federal minimum wage will increase from $5.15 to $5.85/hour, which is a 70-cent raise. This will happen again in 2008 and 2009, which by the end will make the new federal minimum wage $7.25/hour by the end of 2009.
Of course, this is being touted as a victory for everyone making the current minimum wage of $5.85, but the reality is that in the long-term it won’t mean much and it may even hurt the very people it intends to help. I know that a lot of people will refuse to listen or accept the idea of this, but I truely believe it to be the case and I’ve saw the evidence first hand while working a minimum wage job myself.
The following are things I believe to be true about jobs and wages:
- People need to accept the fact that a person with more skill or contribution to the organization they work for will always be paid more.
- The more a organization must pay, the more quality they will want from the worker.
- All extra costs of wages are passed on to the customer one way or another.
If you accept these statements of true, then any minimum wage or minimum wage increase will simply cause the business to up everyone else’s pay so that they feel they are being properly paid in proportion to what they put into the organization and that’s exactly what happened when I worked at a grocery store. When the minimum wage increased, I got a raise (because the Vermont state government required it) and within a month or two so did most others I worked with so that the more experienced people weren’t making the same amount I was.
Then, as time went on, less new people got hired and most existing workers are cross-trained in other activities and therefore begin to take on more duties to help make the wage increases worthwhile.
And of course, pricing of products go up as costs of doing business cause the stores to pass on costs to the customers.
In the end, you end up with a smaller pool of jobs paying roughly the same amount they did before to meet the new increase in prices of products/services, so the net affect is zilch.
However, you know have a larger group of young, minority, and/or unskilled people that cannot find a job because the cannot find an employer willing to hire them at the new inflated wage, but they now must pay more for food.
But, many liberals and liveable wage activists say minimum wage increases and a liveable wage of $15-20/hour wouldn’t cause inflation or job loses. If this is true, then I must ask, why are they being so cheap… why not ask for $50, $100, or even $200/hour??