Small business and Minimum Wage

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by Aaron Anderson

When I turned 16 I got a minimum wage job just like a lot of other people do. It was at a daycare center and I made enough to cover for myself. The daycare had around 40 kids and seemed to do enough to get by and have a little left over. If the minimum wage was increased to $10 or so, I fear it would put more strain on the business. In part some people may want to increase the minimum wage because they hear about the working poor and how much they work but aren’t able to make a good living and want to help. Minimum wage is typically just the wage people entering a new low-skilled job get paid. By the time the person will leave the job they will usually have a higher hourly wage than when they started. “More than half of minimum wage workers are between 16 and 24 years old, according to the U.S. Labor Department” (qtd in Mantel 5). Since more than half of minimum wage workers or under 25, we can assume that they are either in high school, just graduated, or are in college. At these ages people are typically still dependent on their parents and may live at home. This age group is basically just starting out in the workforce and more than likely its part time.

In a time where businesses are just recovering and get back on their feet, people want to find a good paying job. A good deal of people are for an increase in minimum wage, but do they know what it cost? Small businesses are in constant struggle to stay open and to not have debt. The result of a new minimum wage may cause employers to fire a few employees to cut cost, raise their prices or even close up shop. The reality is the increase in wages is also an increase in the business’ expenses and the money to cover it has to come from somewhere and these are just a few examples of what the business may do.

I don’t believe that the minimum wage was created to become a standardized living wage. People weren’t meant to live off of it. “The average hourly wage among the working poor is $10.00,” which is nearly three dollars above the federal minimum wage (Wicks-Lim 19). The working poor make above the minimum wage and despite that, still struggle. I think that this increase in wage has sprouted from the American dream and so everyone thinks they should make enough to reach that dream. The truth is that there will always be people in poverty no matter how hard they work, it’s just the way the world is.

Increasing the minimum wage will result in some employees getting a raise but others will get fired. Paying each of employees a higher salary passes on higher expenses for the business. The business then has to find ways to adjust for this increase. One option is to have fewer employees. Another would be passing the cost on to the customers by raising the price of the product or service. A fundamental law is that nothing can be gained without first losing something. In this case it’s a higher wage gained and the loss could be revenue, number of employees, or more costly expenses. James Sherk, a Senior Policy Analyst in Labor Economics states “Unfortunately, despite these good intentions, the minimum wage has proved ineffective at doing so. Indeed, it often holds back many of the workers its proponents want to help. Higher minimum wages both reduce overall employment and encourage relatively affluent workers to enter the labor force” (Sherk par. 2). Minimum wage is help people from being underpaid, not to make a living from it or to help the economy.

The government should not raise the federal minimum wage. An increase in wage may provide some with more money in their pocket but majority of people making that wage are under the age of 25 and most work part-time. Those whose can’t make a good enough living as they want and are under the poverty line can get aid from the government to help out. The new higher wage would cause many products and services to go up, which defeats the purpose of the increase of the wage. Small businesses will feel more of financial strain because of the now higher salary expense they will have to pay out. The increase in wage may result in fewer employees and as I said before, higher costs and prices. The increase in salary expense will have to be pushed on to someone and it’s most likely form is a price increase on products and services. People already complain about prices as they are, so can you imagine how much more people will complain if prices rise again?

Minimum wage is held at a state and federal level. A state can have a higher minimum wage then the federal government but not one lower. There are 21 states and the district of Columbia that pay a rate higher than the federal government. The federal government just sets a standard and a state can decide on whether or not to go a step further than that. Minimum wage should not be increased because it’s not a wage people are supposed to live off of, it will increase prices on everything, people will be laid off and many of the minimum wage workers are part-time and or under the age of 25.

Works Cited

Mantel, Barbara. “Minimum Wage.” CQ Researcher 24 Jan. 2014: 73-96. Web. 12 Feb. 2014.

Sherk, James. “What Is Minimum Wage: Its History and Effects on the Economy.” Heritage.org. N.p., 26 June 2013. Web.

Wicks-Lim, Jeannette. “The Working Poor.” New Labor Forum (Sage Publications Inc.) 21.3 (2012): 17-25. Academic Search Complete. Web. 12 Feb. 2014

 

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3 thoughts on “Small business and Minimum Wage

  1. I agree. Minimum wage was not established to make a living on, and in a capitalist society there are winners and losers. Minimum wage workers aren’t necessarily losers, but raising the minimum wage can potentially lead the workforce to become sedentary with no desire to further themselves in their career.

    • I agree 100% minimum wage is becoming harder and harder to live off of in this day and age. I believe that raising minimum wage will benefit the whole of the community and the small businesses. It will help people keep jobs, buy a house, and give back to the community all because they have a little extra cash in their pocket.

  2. I have to say that I don’t agree as much. Every time congress considers a hike in the minimum wage, there are people who say it will hurt businesses. At first glance, it makes sense because employers would have to raise prices to afford larger wages. However, people use that reason every time there’s talk about the minimum wage, and if we listened to those people every time, then there would never have been any increase; meaning that it would still be at its original level: 25 cents. The question is not whether or not we should raise it, the question is how often.

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