Minimum Wage Be Increased: A Case Study

Some argue that if an increase in minimum wage is passed businesses will raise the prices of goods and services to help compensate the cost of pay raises. The cost in goods and services is already on an increase due to the high host of gas/oil, yet we are

In the article: “The Pros and Cons of raising the minimum wage” it is said that the raise in minimum wage will cause a price increase. How can this happen? The article states: “Employers might income to support their more highly paid minimum wage employees, which could ultimately create a ripple effect for other shops and industries, resulting in a slightly higher cost of living” which will cause to raise the minimum wage once again. In other words, the effect of raising the minimum wage will cause to increase the price in the market so that the employers can pay their employees. Once again, those who work will keep on being on poverty and the idea of raising the minimum wage will be debatable

One of the biggest arguments against raising the minimum wage is that it ends up raising employer costs (ex. having to pay more for employees) and leaves less and less opportunities for teenaged workers and disadvantaged workers to find jobs. However, David Card and Alan Krueger, both of whom are heads of the

Workers can respond by voluntarily working harder. – Legislated increases in the minimum wage improves workers morale thereby increasing their productivity. The increase in productivity helps balance off the increase in labor cost. An increased wage rate causes an income and substitute effect. Income effect causes the worker to work fewer hours now that their income increased. Substitution effect causes the worker to work more hours.

If the minimum wage goes up the potential of prices being raised are high. In the article “In Washington, D.C., a boost for the bottom line” Gina shaffer talks about raising prices of her products in paragraph 5. If the minimum wage is increased many stores will do the same in addition to letting people go. Another example of this is image A in our packet. The image shows two McDonald's employees enjoying the minimum wage hike, then a single mom with two kids is in the next part unhappy that the price of a happy meal has risen to

However, not everyone is on the bandwagon. Conservative economists point out the negative effects the wage increase could have on the economy. They see it having an effect on the demand of jobs. Businesses facing higher labor costs would raise prices, passing those higher costs on to their customers. That would lead their customers to cut back on their purchases, meaning that businesses would need fewer workers (Lowrey). Raising the minimum wage would also make hiring low-wage workers more expensive relative to other investments, like new machinery. Businesses might then reduce their use of low-wage workers and shift their spending toward other things, such as automated systems.

Raising the minimum wage would establish 85,000 new jobs and would also increase amass household spending by $48 billion the following year (“Should the Federal”). There are no signals shown that a boost in the minimum wage would lower employment. Even though people argue that the authors found “Little or no evidence of negative association

Minimum wage is currently at 7.25 (Furman) if minimum wage goes up so does everything else, so it wouldn’t make a difference. Food cost will go up, such as milk sugar, and everything else we use on a daily basis. Not only that but, It could cause a store to shut down due to having to pay employees twice as much as before. Labor cost would be high and unreasonable. If the prices of items or product being sold doesn’t go up.

Although their wages are being increased to $15 an hour, it is a good indicator of what can happen with a smaller amount of $10 an hour. The city has already had many restaurant closures and other business closures due to the wage increases. Anthony Antonio, the CEO and president of the Washington Restaurant Association stated the cost breakdown of restaurants as “36 percent of funds devoted to labor, 30 percent to food costs, 30 percent to other operating costs, and the remaining 4 percent was profit margin.” With the implemented rise in minimum wage the labor costs would “rise to 42 percent in quick service restaurants and 47 percent in full service restaurants.” This is an indicator of the drastic conditions that this increase in minimum wage can cause for businesses. It is a warning from Seattle to the nation to not go forth with increasing the minimum wage, whether it be $15 an hour or $10 an hour. Either way, with a 4% profit margin before the increase, there has to be some changes to businesses or most likely the option would be to raise prices for the

To start off, raising the minimum wage would put greater prices of many food items. According to ThinkProgress.com raising the minimum wage to $15 an hour would result in food prices to be increased by 4.3 percent. That 4.3 percent increase may not seem like much when you add it to a four dollar cheeseburger, but when

If minimum wage was to increase so would the prices Americans will be forced to pay for goods and services. Businesses do not want to lose any money that they could potentially be making. They will do anything they can to prevent a loss of income. If Congress was to increase the requirement of pay, Americans would quickly see the prices increase. A 2015 Purdue University study found that raising the wage of fast food restaurant employees to $15 or $22 per hour would result in a price increase of 4.3% and 25%. With prices increasing, people won’t be buying businesses products because they may see it as too expensive. If the people who had a raise in

Another common argument made by those in favor of the minimum wage is that it actually helps to stimulate spending, improving overall economic conditions.[vii] The theory behind this argument is that low wage earners typically spend everything they make. Whether on necessities or luxury items, minimum wage earners are likely to spend their entire paycheck. If there were an increase in the minimum wage, the people who would receive the pay increase would turn around and spend their new money. This would help to cover the costs of the increased wages as many businesses would see an almost immediate return through increased sales. While this argument seems to make sense, it must be clarified that no empirical evidence to support this claim could be found.

Proponents of raising the minimum wage claim that if the minimum wage was raised, then many economic and social problems would be alleviated. This contention is at odds both with economic principles and years of creditable research. The effect of raising or even having a minimum wage has been studied extensively and the majority of studies have proven that raising a minimum wage does not have the desired effect. Both micro and macroeconomic forces affect the results of raising the minimum wage. The secondary effects of raising the minimum wage are bad both for

Washuar and Neaumark’s study of the economic literature also found it “as largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers” (qtd. in “Four Reasons”). A study conducted by Mark J. Hicks, the Director of the Center for Businesses and Economic Research and an associate professor at Ball State University, found that minimum wage increases on the state and the federal level, costed “roughly 550,000 fewer part-time jobs,” and “roughly 310,000 fewer teenagers working part-time” (qtd. in “Four

Economists explain this connection with efficiency wage theory. The theory implies that higher wages motivate workers to work harder and increase their incomes to enable them to eat well and become healthier. Increasing the minimum wage thus will increase productivity and demand for labor. A recent study by Andreas Georgiadis (2008) supported this view. In the study, Georgiadis states “estimation results suggest that higher wage costs were more than offset by lower monitoring costs, and thus the overall evidence implies that the national minimum wage may have operated as an Efficiency Wage.”