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Minimum Wage Costs

It is interesting that people want to increase the minimum wage, yet either they don't know or don't care about the costs to everyone.

First, it removes the judgement of companies and can reduce the number of jobs. When the minimum wage becomes higher than what a job is worth, then the employees will find other means or doing the job or eliminate the job. Consider the people who wave signs, do you really think that doing that is worth the same as other jobs? Yet they have to be paid the same minimum wage. While it is not much fun to stand out there waving the sign, there are people willing to do it. If it is not worth the money that is offered, then no one will do it or the employer will have to increase the pay.

Second, when the minimum wage in increased, it increases costs and prices. This means that if you don't get a pay increase you have just taken a step back in your wages. If you do get a pay increase, then that means the minimum wage increase was worthless and in fact could be worse than before. The reason it can be worse is that typically pay increases are based on percentage so the wages of higher paid people go up faster. It also means that a person who has managed to learn and increase their wages can now be closer to the minimum wage again.

Third, people say that the minimum wage should be a living wage, but minimum wage jobs are typically starting jobs, not a career. If you want to earn more money than a minimum wage job you need to learn more and take on more responsibility in order to get a better job. It should not be a lifetime job.

Fourth, do people who want to increase the minimum wage have no idea that when they increase the costs of a company, that those increases are passed on to the consumers in one way or another. Either the prices are increased or the service is decreased. When the prices are increased, then everyone pays more and the increase can be more than the minimum wage increase which results in a step back. As they have increased the minimum wage, they also say that poor people are worse off today. I guess that they can't relate the two and realize that increasing the minimum wage will make things worse, rather than better.



Index for Insanity, Inc.

Written: 14-Nov-2003

Updated: 14-Nov-2003

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