Raise in Minimum Wage Does Not Mean Rise in Unemployment

@N4life (851)
United States
July 25, 2009 9:07pm CST
When countries display a good equity balance and raise minimum wage unemployment often goes down and overall GDP goes up. Two studies; Galbraith and Garza-Cantu, published in The Journal of Economic Issues 199, and secondly Ferguson and Galbraith published in Research in Economic History point out that unememployment and inequality have risen and fallen together. A study outlined on the University of Vermont website http://www.uvm.edu/~vlrs/doc/min_wage.htm details a raise in minimum wage and its affect in states such as Oregon. Another study looking at Midwesten states found increases in minimum wage did not reduce private employment http://www.allbusiness.com/government/government-bodies-offices-regional-local/11670186-1.html Many seem to want to simplify this issue into a "minimum wage increase labor expenses for employers so they must increase umemployment" argument. As a moral issue, not everyone has the capacity or the luck to have the particular talent which a "free market" (no such thing) may decide to value the most at a particular time. Yet another economic plus, if we pay min wage workers more, this means less subsidizing of families with welfare programs. Anyone disagree that a living wage should be expected no matter the job?
2 people like this
3 responses
@katran (585)
• United States
26 Jul 09
Thank you for actually doing the research and backing up your claims. A lot of the conspiracy theorists and alarmists around here do not do that, and it drives me up a wall. Too many political discussions are all about partisan opinions with no facts to back them up. I get tired of reading through all the garbage day in and day out. This discussion is a breath of fresh air. I hate the "let them eat cake" attitude that has been adopted by certain people in this country. I don't know how those people sleep at night, to be honest. I actually saw someone say that if a person wants to make more money then they should go to school and work hard and get a better job. Well, guess what. Not everyone has those luxuries. School is REALLY expensive. I come from an upper middle class family and we still could barely afford it. It appalls me that someone would suggest that people who barely scrape by feeding their families on minimum wage jobs somehow deserve what they get if they can't do better for themselves. Man, this country is messed up.
@Taskr36 (13963)
• United States
26 Jul 09
"I actually saw someone say that if a person wants to make more money then they should go to school and work hard and get a better job." Are you saying that's not the American dream? "School is REALLY expensive. I come from an upper middle class family and we still could barely afford it." I'm not sure where you went to school, but there are inexpensive schools out there. I did my first years at a community college for about $40 a credit hour and did the last two years of my bachelors degree paying about $80 a credit hour at a 4 year state college. I got help from my job which offered a fair bit of tuition reimbursement to help me along, but I still paid my way through. My Masters degree was a lot more expensive. It cost about $270 a credit hour. I took out student loans to help with that. The job I had at the time offered 50% reimbursement for one class and the rest came out of my loans. My point is, ANYONE can do what I did. There's no reason anyone can't take out student loans to help them get through college. With internet courses available at so many colleges you don't even need transportation to get to class anymore. The simple fact is, this is the land of opportunity. ANYONE can make something of themselves and people from the worst economic backgrounds have done it. You talk about feeding a family on minimum wage. I have to ask what choices a person made to be an adult with a family to care for on ONE person's income with only minimum wage. Our lives are a series of choices and I believe in people taking responsibility for those choices. It's not my job to bail people out because they don't qualify for better jobs.
@N4life (851)
• United States
26 Jul 09
There are many issues that liveable wages can make better that you do not consider taskr. First if only one parent has to work than perhaps they can do their job of parenting better, lessening the chance their kids will wind up costing tax payers money through various avenues. Lower crime rates would likely result because of a multitude of factors, this would reduce tax stress on many fronts. Better educations for children of minimum wage workers would likely result, meaning that kid who could turn out to be the surgeon that saves your life will likely be there. Ultimately societies and governments can not funtion when rich/poor gaps become too wide. No matter your stance on this issue it is in your interest to have a semblence of equity.
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@N4life (851)
• United States
26 Jul 09
katran: I see you point with the school issue. So,you come from an upper middle class family which makes it very difficult to afford college while lower income people get grants and higher income have no difficulties paying. We need national education at the college level that is paid for no matter income level if it is shown that the student can do the work. "Let them eat cake" is how we end of one of the most violent societies in history.
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@machizmo (279)
• United States
26 Jul 09
Those that oppose minimium wage are those that do not usually have to work for it. I never saw it as hurting business as much as people say it does.
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@N4life (851)
• United States
26 Jul 09
If you have lived it, you do realize the anti-motivational effect it can have. I think health care costs hurt American business much more than a raise in minimum wage ever would and data backs it up.
@Taskr36 (13963)
• United States
26 Jul 09
Anti-motivational my butt. Working for minimum wage when I was 17 motivated me to leave and get a better job. Not being satisfied with the wages I made and raises I received at that job motivated me to get myself through college so I could EARN a living wage. If you want better than minimum wage, you need to earn it.
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@Taskr36 (13963)
• United States
26 Jul 09
Teenagers don't deserve a living wage. They are teenagers and for the majority of them, they aren't worth a living wage. I've been a teenager, I've worked with teenagers, and I've been a manager that had to put up with teenage workers. Some are good, but the vast majority aren't worth any more than what they are getting paid. The minimum wage workers that aren't teenager are typically retired folk who just like having a low stress job that puts a little extra spending money in their pockets. Here's a rundown from the U.S. Department of Labor, Bureau of Labor Statistics. You'll notice that "About 2 percent of workers age 25 and over earned the minimum wage or less." I don't we should all have to foot the bill for that 2% who lack the drive to better themselves. http://www.bls.gov/cps/minwage2002.htm
@ParaTed2k (22940)
• Sheboygan, Wisconsin
26 Jul 09
Of course it doesn't change overall employment statistics much. There aren't enough people actually making minimum wage to effect state or national unemployment statistics. What can't be denied at all though is that increasing minimum wage does significantly increase the payroll expenses of every company that pays minimum wage. Payroll is increased without any kind of increase in productivity.. which means the employer has to decide how many employees they can afford to keep, and how many they have to let go. Why do people think that just because minimum wage is increased, employers somehow have more money to play employees?
@Taskr36 (13963)
• United States
26 Jul 09
Well Miami has a higher minimum wage than the rest of Florida, yet we also have the highest poverty rate in Florida and the 5th highest poverty rate in the country so tell me, what exactly is raising minimum wage doing for this dump of a city? What it's causing is a decrease in wages for other jobs to compensate. "For example, a sales position that a year ago offered a $60,000 base salary that could grow to $150,000 with commissions has turned into a $35,000 entry-level job with earning potential of only $60,000 or $70,000." http://www.sun-sentinel.com/business/yourmoney/sfl-paycut-072409,0,5477660.story The money to pay for increases in minimum wage comes from everybody making ABOVE minimum wage.
@N4life (851)
• United States
26 Jul 09
The wage declines outlined in the link you provided may be more to do with a tight job market than min wage. At any rate, raising min wage does not always equal higher unemployment or drop in other wages as links I provided point out. Personally I feel we need to adopt more strict wage requirements on all levels. This would increase the chance of having a real republic, decreasing influence of cprs on decisions. I'm not saying everyone should make the same but standards need to be set...oh that sounds like the dreaded S word. Issues are not simple or straightforward.
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@N4life (851)
• United States
26 Jul 09
"payroll is increased without any increase in productivty..." Many studies, including one of those provided, point out that productivity does increase because job retention increases. The net affect on labor costs is often a wash because of this increase productivity and the savings brought from the retention of employees. It costs money to bring in and train new employees. I don't know about your area but I can find the stats here on min wage jobs and since the service sector is booming a gaurantee you they represent a significant number that would affect employment stats in my state.
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