I have been hearing allot of people talking about raising minimum wage recently and it seems allot of people are for it. I mean, it SOUNDS like a good idea right? Just pay people more and every one is happy.
I don't, however, think that many people think about the consequences of these kinds of actions. They don't think about where the money is coming from or where it is going to go. I am not too sure about the rules with citing references on blogs but i will try to keep it to a minimum at least for now.
It may seem like too much to go into this but not doing it leads to an uninformed choices.
Okay, WHY does minimum wage exist? Fair Labor Standards Act, 1938. It is part of labor laws that are intended to keep the employees safe from the employer. Its illegal for them to pay you below a certain threshold (unless you work for tips.) It keeps the work environment safe- to an extent. It will protect you from your fellow workers -to an extent.
The United States has an economy based on capitalism. Employers want to pay you as little as possible for the most work possible. Employees want to get paid as much as possible for the least amount of work possible. The balance is how much you actually work for.
At the time the law was created, people didn't have much of a choice who they worked for. You had very few options of what you could do if your employer simply did not FEEL like paying you as much as you think that you deserved. The economy was smaller and an individual did not have the opportunities to go to other employers to find work. You didn't have MONSTER.COM or other employment sites. Unemployment checks to pay your bills. You couldn't drive around and hand in applications by hand etc. Remember we are talking about MINIMUM WAGE. It was harder for them. They were pretty much stuck unless they were lucky and found another employer.
Now, that being said. Companies have a set budget - believe it or not. They set aside a certain amount of money for marketing, payroll, management, shipping etc. Imagine a pie chart where 100% of a companies assets are accounted for - that's the way it works in real life.
Now, we are talking about MINIMUM WAGE so lets stick to a business profile with a large volume of unskilled labor. A wall mart for example. say 300 employees all getting paid minimum wage.
Corporate finds out that minimum wage is being increased and the 300 employees pay is going up from 7.25/Hr to 10.00/Hr.
Each employee working 40 hours per week will get paid $110.00 more per week or $5720.00 per year
Each store will need to devote an extra $1,716,000.00 per year to paying the - lets face it- bottom people on the wall mart totem pole.
Where is that money going to come from? I'm sure management will take a huge cut in their bonus checks and devote it to the payroll department. I mean YOU would do that at your job right?
No.
I'm sure that they will simply raise the price of their merchandise to pay for the increase in pay.
No.
Wall-Mart has started a practice that many many other companies are starting to follow. (companies that have a large volume of unskilled labor) and cut the number of hours each employee gets. The benefits of this devious move are two fold for company profits. First, if the employee is working PART TIME technically and no longer needs to be given benefits like HEALTHCARE. Second, much less chance of having to pay an employee overtime exists since all the hours are cut. Businesses that employ unskilled labor now tend to follow the practice of hiring twice as much staff at half the number of hours so they don't need to provide benefits. Then as the company has expenses they begin to dial back the time employees get paid for by under staffing stores. The under staffing causes the employees that work there to work even harder to maintain the store picking up the slack for the employees not scheduled to work. Ask an wall mart associate how many hours they are scheduled for in a week and you will be give an answer like 8. (that's the one i got and its normal) - just ask.
(is it rude to ask how much someone makes? if they get over paid it is.)
The way the system works right now, raising minimum wage HURTS these people. they work harder and get paid LESS.
What can poor minimum wage people do to get paid more? I suggest getting another job. one that pays more. They need to make themselves something employers would simply pay more for. Go to a job search website and do whatever you want to do. You get paid what you are worth as an employee. Like a product.
What if we lowered it to 1 cent per hour? How would the economy react? jobs start saying they are only hiring at 1 cent per hour. who the hell would work there? no one would. You would sure as hell find a different job. they would be forced to raise their rates to something people would be WILLING to work for. If it was less, the cost of living would decrease because payroll is smaller. they could afford to give employees healthcare again.
