Federal Minimum Wage To Increase to $7.25

Federal Minimum Wage IncreaseAs 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:

  1. 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.
  2. The more a organization must pay, the more quality they will want from the worker.
  3. 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??

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2 Responses to Federal Minimum Wage To Increase to $7.25

  • Yeah…pass it along to the consumer in the form of higher prices. We couldn’t possibly take the hit out of our epotentialy growing corporate profits. God forbid some CEO can’t afford to trade up his Hummer this year….and to those in the middle of the wage scale…shut up with your “relative worth crap”…you’re already making a decent wage. Raising the standard of living for those at the bottom requires the rest of us to sacrifice. Let some business owners and CEOs live for 120 days on minimum wage, just like the Congessmen who had to live on food stamps. Apparently, you’ve been drinking the Chamber of Commerce Kool-aid that has had people believing this warped perspective for years. They even have you believing you’ve “seen it with your own eyes”. This is Republican fuzzy math at its worst, and assumes a chain of events that is highly unlikely to happen, because at the end of the day, they still need someone to sweep the sidewalks and bag groceries whether it costs them $5.25 per hour or it costs them $10 per hour. I say put the minimum wage at a reasonable level and then tie it to Congressional pay raises!

  • Hello Cid,

    Thank you for your comment.  From what I understand you also believe that increasing minimum wages will cause inflation through higher prices, but you believe that others higher up should not receive a wage increase as a result to meet the new costs of living.

    You you also suggest that its the corportations that are the problem in that you believe that they are over-paying people at the top and paying people at the bottom the minimum wage.  I believe this to be false, as I haven’t seen any major corporation that pays employees the minimum wage (especially when including benefits). In fact, many corporations including Walmart were for the minimum wage increase as it would force smaller competitors (local small businesses) to pay more for their employees making it harder for them to compete against large retailers.

    This is where the job loses often come in… where small operators or people wanting to start a new business see all the restrictions on business and the minimum wage and it scares them away from starting a new business.  They simply don’t bother because they simply cannot afford to pay someone so much per hour and often times a small business owner is making less minimum wage themselves when starting a business or going through rough economic times in their business.

    The minimum wage also hurts the unskilled person from competing with skilled labor.  If someone has no skills or cannot work the schedule and employer asks, shouldn’t they have the right to offer there services for a rate below $7.25 in exchange for a more flexible schedule or training?  What right does the government have in saying a person cannot offer their services for whatever fee they want?

    You also implied that I make more than the minimum wage and that I should allow others the chance to make more.

    I actually average a little less than the minimum wage. Of course I hope to make more in future years and I’m working very hard to make this happen, which is the way it should be.  No one would should demand a $7.25/hr or $10/hr wage.  You start where you can and go up from there through hard work.

    Again, I appreciate your comments and hope you will comment again in the future.

    Jeremy Ryan

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