Minimum wage raises and the consequences it will have

Minimum Wage Should Not be Raised Low-wage worker, disadvantaged, poor, no matter the name you choose to use minimum wage workers will suffer unintended consequences and pain with no hope in getting the help they need if emotions, rather than the economic facts when it comes to the changes that will take place when a federal $15 per hour minimum wage increases are carried out. Raising minimum wage will have a negative impact that will be far more reaching than we consider and have an effect on generations to come modifying our economy and society. Unfortunately, these raises have people arguing and protesting for them with the best of intentions but, Jack Kelly founder and CEO of WeCruitr and senior contributor to Forbes Magazine points argues back that “We are misleading people to think that these lower-rung jobs will afford a sustainable lifestyle” (Kelly par. 11) which just isn’t true because these jobs are not intended to support an adult or family. Surprisingly, the demographic that benefits most from a minimum wage increase will be middle class teenagers, the U. S. Bureau of Labor Statistics (BLS), in 2020 reports “employed teenagers (ages 16 to 19) paid by the hour, about 5 percent earned the minimum wage or less, compared with 1 percent of workers age 25 and older” (BLS Characteristics par 6). Most minimum wage earners are not the primary providers for their family, they are secondary income earners that commonly work part-time. Precisely, the intent of minimum wage, when enacted by Congress in the Fair Labor Standards Act passed in 1938 was to allow for a reasonable wage for the unskilled or low skilled worker. Much of these people “may not have had a job ever or have had one only in the past year. Their communication skills may not be adequate or they may not be fluent in the language. They may not have finished basic schooling. They may not have learned to follow instructions, show up on time, or diligently complete tasks they don’t like. ” writes the President of Marotta Wealth Management David John Marotta, in his article titled “Raising The Minimum Wage Hurts The Most Disadvantaged. ” Yes, it is agreeable that these people need to make a living so, they should be looking to the future and working to hone skills as well as get experience to be more marketable in future workforce endeavors. A $15 per hour minimum wage will change the dynamic of work, certain jobs are basically for creating a work ethic, they don't require much, so they don't pay much. However, the consequences of a higher minimum wage won’t only come in the form of layoffs only, "In reality, there are a number of things employers can do in response to a minimum wage hike that don’t involve laying off employees” many people have a tendency to forget that non-cash compensations are considered part of an employee’s wages as well. So, while an employer may not lay off their current workforce those laborers may end up footing the bill for the minimum wage raise. Many businesses will resort to using options like cutting hours “Remember, the simple supply and demand model says that increasing the price of labor leads to a lower quantity of labor demanded. But an employer doesn’t need to cut workers to achieve that. They can cut their hours instead” and if cut hours are the result of raised minimum wage to meet the bottom line then that loss will have an impact in other aspects of the employee’s life as well because the result is “The cost of an employee to the employer is not just the wage but total remuneration, including benefits such as health insurance” a lower wage worker cannot afford to lose both hours and a health insurance benefit “Simply put, as the minimum wage rises, other elements of worker compensation fall. ” Many low wage earners are unskilled workers that tend to work physical jobs and if we raise the minimum wage “An employer could try to raise worker productivity to match the new minimum wage. One way to do this is simply to work their employees harder” again another hardship, not necessarily on the business but the laborer. If a percentage of the workforce was laid off due to increases on spending by the business in higher wages, the expectation would be to work harder. Likewise, small businesses will have consequences as well, it is ironic that the business Punch Pizza that former President Barak Obama used as an example in his 2014 state of the union speech as “paying its employees above minimum wage and currently pays an average of $13 per hour for starting wages. ” co-owner John Puckett now says “We’re trying to figure it out, ” when it comes to rising labor wages. This attitude comes from “Punch Pizza lost over $1 million in revenue last year and will likely continue to lose tens of thousands of dollars a month this winter. ” Yes, that came during a pandemic but it puts the burden of survival squarely on the back of business owners who are still trying to recuperate from being shut down for close to 2 years “we think that coming out of the pandemic, we will be able to retain more of that business and hopefully, continue to stay ahead of the minimum wage, ” Puckett says. Running a business is difficult enough without having no choice to raise your employees’ wages only “thinking” or more likely, hoping you will survive with the end result being that no one is earning a living. Ultimately, mandating a minimum wage raise would not merely affect the worker or the business, be it a large corporation or small family run business, but it would affect the customer too. I think proponents for raising the federal minimum wage forget that the low-wage worker are also customers. So, raising the minimum wage to $15 per hour likely will create a situation that the cost of living would increase meaning the costs of products and services go up “If businesses are forced to pay more to employ workers, budgets are affected accordingly. To help with the bottom line, prices may go up as a way of retaining money spent on providing extra compensation to minimum wage workers” negating the advantage of raising minimum wage.