Tag: minimum wage increase bad

Minimum Wages Only Hurt the Economy

By Jack Parkos | United States

Recently, a couple states have been not only playing with the idea of a minimum wage, but trying to pass bills on it. However, this is a bad idea. Not only is raising the minimum wage going to hurt the economy, but any minimum wage is detrimental. It hurts workers, business owners, and consumers.

The concept of a minimum wage implies that the government owns a business and its money. To believers in minimum wage laws, I have a simple question to ask. What gives the government the right to decide wages? The answer is, simply, there is none. A business is the property of the owner, not the government. The economy, not the government, is ultimately responsible for deciding wages.

This brings me to my next point. Many economists agree, a minimum wage is bad, let alone a higher one. Let’s assume we go with Delaware’s proposal to raise minimum wage to $10.25 by 2021. This is a $2 increase to the current price floor for labor. This may not seem like a lot, but for a business owner it could be disastrous. Raising the minimum wage to $10.25 an hour, or $15 an hour like many advocate, would be a disaster for the restaurant industry. On average, restaurants make only 5 dollars in profit for every 100 dollars in sales. It is already hard enough on restaurants to pay employees (which is why waiters get tips in exchange for lower wages). However, this is not always the case, and in many cases, employers would be forced to cover the full increase in the minimum wage.

This will lead to two major detriments. First of all, employers may need to cut back on their staff. A small business with a low profit margin may not be able to pay its employees a higher wage. As a result, the employer will likely lay off some workers to afford the wages of others. Also, a minimum wage increase may lead to an increase in prices. To afford to pay higher wages, employers are likely to have to raise their prices. However, any government policy that leads to price hikes is bad for the economy. Prices and wages should go up and down based on market forces of supply and demand.

Conversely, proponents of the minimum wage argue workers will be taken advantage of. Many claim workers will not be paid their fair share. Yet, this is simply not the case, and economic competition disproves the notion. Prices on labor follow the same economic forces as prices on goods. Just as nobody will pay 20 dollars for a cheeseburger, no one will work a job that pays 10 cents an hour. Thus, a business owner will look at profits and determine a wage that people would be willing to work for. That’s how it works for all jobs, and laws cannot substitute this process efficiently.

My final point is that minimum wage jobs are simply not meant to be a career. They ares stepping stones to that point. Many people’s first jobs are minimum wage jobs. The jobs are often marketed to high-school or college students trying to gain experience. Also, many of these workers, given good performance, receive a raise in their first year. Clearly, wages would be determined by the economy, not by government.


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Everybody Loses: The Effect of the $15 Minimum Wage

By Ricardo Tremblay | CANADA

On January 1st, 2018, the minimum wage in the province of Ontario, Canada, increased from $11.60 CAD to $14.00. On January 1st, 2019, the minimum wage will be further increased to $15. Out further west, the province of Alberta has also passed a law that will increase the minimum wage there to $15 in the month of October 2018.

After only a week of the change being put into effect in Ontario, prices across the whole province for various goods and services have increased significantly. This is due to the fact that businesses will not, and rightfully should not, simply let themselves lose money because they have to pay their workers 20%-30% more. The easiest and most effective way for businesses to make that money back is to increase the prices of their goods and services accordingly. In other words, the price for goods and services at many retailers goes up. This is bad for customers, as they have to pay more, and this is bad for the businesses, as they are not gaining anything out of the change themselves and have to increase their prices.

“But it benefits the poor workers!”, some may say. What these people fail to realize is that businesses have also been laying off many workers, and giving minimum wage employees shorter and less frequent shifts. These employees will end up seeing that this ‘benefit’ may end up costing them their job, or not doing much more than giving them fewer work hours. The employees aren’t exempt from the price increases either, so ironically they will end up paying more for products as well.

This creates a situation in which businesses, employees, and especially consumers end up unhappy and frustrated. Not many people, if any at all, actually end up benefiting from the minimum wage increase. In comparison, the recent tax cuts in The United States have resulted in bonuses and wage increases for employees all over the country, and this was all done without hurting consumers, and by instead helping corporations flourish.

All in all, this is just another of countless examples as to why government interference and a government-controlled economy lead only to harder times for everyone. Some Canadians may have suffered due to these changes, so hopefully advocates for higher minimum wages in other provinces and nations will soon realize the effects of their desires, and instead advocate for a freer, more stable method to benefit the working class, that isn’t at the expense of everyone else.