Supporters of a higher minimum wage incorrectly believe that it will help teenagers and minorities. This post is a somewhat brief summary of why and how the minimum wage and the raising thereof for real hurts low-skilled workers in terms of unemployment.
On the exterior level, raising the minimum wage increases the cost of labor over the board and makes it more expensive for firms to hire workers. At first perceive (the only perceive Washington ever takes), raising the minimum wage is very bright to the midpoint someone and to politicians. It'll put more money in the pockets of a low-skilled laborer, they say. Upon prognosis using some basic system of economics, however, the proposition seems the opposite of beneficial.
Trickle Up Poverty
The laws of supply and examine dictate behavior in community either we want them to or not, folks. As one of my economics professors once said, the basic system of economics are always at work. This opinion is just as much armchair economics as it is technical jargon. When the minimum wage is raised, employers look for employees with more skills that are more sufficient to offset the increased cost of that labor. Thus, they hire less low-skilled workers. You see, in essence, a minimum wage law is effectively an example of a price floor. In terms of economics, it creates an immediate shortage of jobs and a surplus of inherent laborers. What is even less unavoidable is the fact that the more the minimum wage is raised, the more bright a minimum-wage-rate job becomes to a previously unemployed high-skilled worker, decreasing the total amount of ready jobs even further.
Yet other supervene that goes unnoticed is a inherent wee growth in prices for consumers. Most fellowships will most likely choose to not go this route, but some might. Citizen tend to forget that the money to cover the increased wages must come from somewhere; it does not just magically appear from nothing. Washington often forgets this simple fact as well. As stated, some fellowships may choose to raise their prices which offsets the costs to the consumer, thus the total utility (benefit) to community is decreased. Employers, if the minimum wage is raised high enough, may even go so far as to outsource their labor to foreign countries, hire illegal immigrants, or pay their employees under the table. As such, the only groups I can think of that would for real benefit from a raising of the minimum wage are illegal immigrants and workers in foreign countries.
Another group that would probably benefit is politicians, but they benefit from virtually every policy they put into effect. They and their respective voters and supporters seem to believe they are on some moral high ground, constantly stating that they want to help teens and minorities. This is ignorance at its best. Not only do they say one thing and do another, but they almost always don't even understand the ramifications of what they do.
People rejoinder to incentives. Raising the minimum wage gives more Citizen the incentive to disregard pursuing a important education. In doing so, young Citizen set themselves up to 'live poorly' in the long run. And no, minimum wage hikes do not decrease poverty. Sure, previously poor families that contact a pay raise may escape poverty, but previously non-poor families will ultimately fall below the poverty line in accordance with the aforementioned incentive effect, thus a minimum wage hike hurts everyone in community in the long run.
I would even go so far as to argue that in system there should be no minimum wage, and that wages in most fields (obviously there would be exceptions) should be allocated based on the productivity of the employee. This occurs in the field of sales with a thing called commission. This system would allow the most sufficient workers, essentially the hardest workers, to earn the most money. If I were an employer, I would for real implement this system in every way possible. I believe this system would make employers more profitable as well, which is again a good thing for society. After all, we do live in a world surrounded by meritocracy and credentialism, for the most part. It's fair, as high pay rates are reserved for those who want and need it the most. How's that for morality and economics!
But Tyler, how will Citizen live? Let the government subsidize education, internships, housing, or food (they already do much of this), and encourage low-skilled workers to become educated so that they can accomplish higher paying jobs. This would also effectively decrease the amount of low-skilled workers and growth the amount of ready minimum wage jobs, thus helping teens and minorities even more.
If you are a relatively sufficient worker, present this idea to your employer; your rate of pay may growth if he agrees. If not, however, do all things you can to keep the opinion under wraps, as you will probably see a allowance in pay or get fired when he or she recognizes the very fallible system.
Why the Minimum Wage Hurts everybody and Causes Unemployment
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