Currently the federal minimum wage is $6.55. In July 2009, it will rise to $7.25 (Fair Minimum Wage Act of 2007.) This is the minimum wage a laborer can be paid. However, many states surpass the federal minimum wage and enact laws that set their state minimum wage higher than the federal wage. For example- Ca state minimum wage law is $8.00 an hr.
According to Senator Obama's plan to stimulate urban prosperity he will, “ raise the minimum wage to $9.50 an hour by 2011.” Senator John McCain voted against the Fair Minimum Wage Act of 2007 and his current platform does not include a plan to raise minimum wage. In order to make an informed decision we all need to know the pros and cons of raising minimum wage. Economist's disagree about the implications and effects of raising minimum wage. The Pro's say it will increase the standard of living, motivate employee's to work harder, stimulate consumption, etc.. The Con's say it will exclude competitors and certain laborers, doom small business, cause inflation, and unemployment. Which ever side you choose to believe, I hope you will take time to ponder the following questions and make an informed decision.
- Minimum wage jobs are typically unskilled jobs that do not require a college degree or education. If a job for a nurse in Mississippi pays $12.00 per hour, but a minimum wage fast food worker job pays $9.50 per hour, then why would someone create the college loans to pay for an education that will only earn them a couple dollars more than a job that doesn't require the expense and time of college? Will this discourage education and promote complacency or give a higher quality of living to those that do not seek education?
- When employers encounter an extra two plus dollar an hour expense in wages the employer is going to raise prices, cut quality, etc… to make up the difference. In other words, the cost is put back on the consumer. So the minimum wage worker and everyone else (who didn't get a pay raise) will pay more for any item sold by an employer that has minimum wage workers. It seems to me minimum wage workers will be breaking even, but middle class and upper class workers will be paying more for nothing?
- When employers encounter the added cost of raising minimum wage- jobs may be downsized and hours cut. Would a worker be better making seven dollars full time, nine dollars part time, or nothing from downsizing?
- Raising minimum wage can effectively make certain jobs unemployable. For instance,- Can a small business, like a mom and pop dinner, afford to pay a teenager $9.50 to wash dishes and still afford costs of operation?
- Cost of living expenses vary per state. California and New York have extremely high cost of living. Whereas, states like Alabama and Mississippi have rather low costs of living. What will happen in the smaller cost of living states when the wages are raised beyond what the cost of living is? Will this exclude low cost competitors from labor market and cause monopolies or will it give low paying jobs opportunity to consume more?
