4/04/2005

The Minimum Wage Controversy

The oldest workers and the youngest workers are the two groups that are most likely to be unemployed. An increase in the minimum wage is said to negatively affect the younger worker because many entry-level jobs will no longer be available to them. This will then put a burden on their parents who have to provide for their children for prolonged periods of time. The older workers suffer from the increase in minimum wage because they have fewer options for finding employment during their "golden years" and this negatively affects their standard of living, causing them to depend on public benefits to live. Is an increase in minimum wage harmful or helpful to society? As first the immediate response is that it is helpful because people will make more money, but thinking it over more carefully may give you reason to think otherwise.

5 comments:

The Insane Realist said...

Could the problem possibly be the capitalist system of economics? I think so bob, we have a winner.

Worker pay is in contradiction to maximizing profit. A employee's pay is not determined by the value of his labor but by his minimum needs or the scarcity of his skills.

Marie said...
This comment has been removed by a blog administrator.
Fred said...

I don't believe raising minimum wage is a bad thing. The cost of living has risen, and like marie said, it is impossible to live off of $5.15 an hour. I also agree that consumers don't realize, in many cases, thatlow wage jobs (like fast food) may be harder than other jobs which pay twice as much. So just because a job may be considered "low wage", that doesn't make it "low effort". If workers were paid by effort, I think there would be some big changes in many industries.

Marie said...

It is true a workers pay is never placed on the workers value, and perhaps if it was, some people within a industry would get paid more while others are paid less for their quality of work. Perhaps this would increase competition within industies creating better workers and more profit maximizing. I do not think that employee's wages are a complete detourant of profit maximizing. I think that with the right regulation higher, employee wages will increase profits. Without good employees and good work, your business will not produce which, would lead to no profits. I personally could venture to guess that the insane realist would not find 5.15 adequate to pay for bills, or any standard of living. I think that people are quick to presume that jobs at one level have no value. Well, even though most fast food joints pay more than 5.15, people would state that there is no value placed at that job. How big of a demand is placed every lunch hour at a fast food restuarant? A lot, because businessmen with "high-value" degree positions can puff themselves up to think that their value surpasses others within their community, and deny the emphasis they place on all the services rendered to them.

Dr. Tufte said...

-1 on Fred and Marie's comments for spelling and grammatical errors.

Fred is right that minimum wages should be adjusted for inflation.

The tone of most of the stuff if a bit off though - very, very few people are supporting anyone (themselves included) with a minimum wage job.

Economists views of minimum wage changes are also evolving. There just doesn't seem to be a lot of evidence that increasing minimum wages costs very many jobs. The profession is a bit perplexed about this currently.