Now before anyone scolds me for wanting to get rid of the policy that granted me my highest paying job, hear me out. The world today is fastly being taken over by big corporations. Somehow Americans GDP per Capita continues to rise; unemployment still seems to be rising. With February’s unemployment numbers being higher than last year’s mark. American Jobs are being outsourced to foreign countries, and it seems nothing is made in America anymore.
The minimum wage is currently $7.25 in PA and runs as high as $15 in other states across the country. But where do we draw the line? It is human nature to believe that they are worth more than what they are being compensated for. Measuring someone’s value is not always a fair truth. Do you think someone scanning groceries at your local grocer is worth $15 an hour? The grocer certainly doesn’t think so. In 2019 it was reported that nearly 50% of checkouts were done by the consumer, with no clerk required. Big grocery stores like this have no problem in reducing their expenses by eliminating the need for baggers and clerks to help customers check out. The minimum wage requires companies to pay their employees more than they are worth in the eyes of the employer. The minimum wage and raising give a false sense of wealth to those that fall into it. Here is a very short example. PA raises the minimum wage to $15. Walmart raises all prices in their store to compensate for the revenue they need to make up in order to keep their whole staff employed. The minimum wage worker has more money in their pocket but the same buying power they had before.
In much of the same way no one comes to fill up your gas tank, greet you at the door, or even wash your windows, many employers will cut down on nonessential jobs that are not required simply because it saves them money. Take your high school job, for example. Maybe you were a lifeguard, served ice cream, or even washed cars. If the minimum wage was raised, do you think there would have been as many 11th graders working with you? Probably not. This article by Mises.org also goes on to explain that low wage jobs pay more than just money. They give experience. One of the most lacking qualities of college graduates is experienced, and many big companies and small business alike do not hire low wage workers to do small tasks while at the same time learning the trade. Unskilled workers receive pay that is adequate. If you give them more than what they are worth, in an economic sense, there is no incentive to become skilled or work harder. Not only that, when prices rise due to growing costs on businesses, this discussion will happen once again.
If you are interested, Forbes has an excellent article here on why the minimum wage’s unintended consequences could result in a poorer society.
This really interesting Andrew, to be honest I have never thought about negative implications of minimum wage, I assumed it was a good thing. In actuality it leads to employers cutting other jobs, so certain people can make more doing their individual job. It is a sacrifice to pay people at a minimum wage, because the employers do not value the workers at the prices they are set at. They will find anyway to cut other costs possible, which will decrease the amount of other jobs available. I am interested in this topic and look forward to learning more about it, good luck!
I think your post brings up some very relevant points, such as the increased mechanization in many lines of work, as well as the incentive for employers to turn to self-serve/computerized options. I think the Forbes article you attached also illustrates some important points about the nature of the minimum wage argument. I think many people just look at it as an issue of companies being tight with money and not waning to pay employees more. However, there are much larger economic impacts involved with such a policy.
The low minimum wage is what is currently keeping our economy growing at such a slow pace. A majority of the increase in unemployment is due to the pandemic ruining a lot of jobs for blue collar workers. Five guys has the exact same prices in California and Pennsylvania even though the labor costs are much higher in California. At some point we have to let businesses that cannot survive without paying people an unlivable wage. While minimum-wage jobs are good for students who need experience, most entry level jobs are worked by adults. If we want to promote education and skilled labor within our nation wages need to go up. If that causes there to be less grocery jobs, some mother industry will see growth. The current low minimum wage is trying to help businesses, but the businesses would see success from having workers motivated by high wages.