The debate about minimum wage is a sensitive subject causing a heated exchange of pros and cons. Recently a politician told a story of her mother making minimum wage in 1970 and how she could afford basic necessities including a place to live. This argument to raise minimum wage is failing to use reality to justify this increase.
Raising the minimum wage increases cost for business. the salary gap is decreased between unskilled versus skilled labor, and the unemployment rate is not impacted positively. The cost to run a business is increasing daily because of regulation imposed by federal, state and local governments. These regulations include health insurance, environmental compliance, workman comp, insurance, and the standard costs of overhead.
Closing the gap between unskilled and skilled labor is another issue not debated. Many skilled laborers have achieved the current wages because of collective bargaining, developing skills, earning certificates, and growing in skills in a variety of industries. Minimum wage is a starting wage for unskilled labor. Many skilled laborers have started at a minimum wage and have developed from that point. Increasing the minimum wage decreases the wage gap and causes an influx of money to begin to flow through the economy. This increases demand and with demand , prices go up. Because the skilled labor is not considered the cost of living increases for them as well without an increase in income.
In a capitalistic economy supply and demand are how the economy thrives. Whenever there is an increase in income, individuals create demands for products and services. As the demand increases so does the cost for products and services. An example of this can be seen shortly after World War 2 ended. The returning soldiers went back into the work force, and many woman stayed in the workforce. This increase in the workforce, increased the need for automobiles, bigger homes, and luxury items. The cost of televisions, vehicles and many other products increased because of the having two incomes.
A way to increase the amount workers get paid is an economic principle. If the job market has more available jobs than workers, then employers need to offer an incentive to get the workers needed. The incentive can include benefits, hours worked, wages, paid time off , and many others. When a business offers such benefits a worker can move into a new position providing a better lifestyle.
Using an economic model to increase wages would benefit the majority of workers, instead of focusing on the unskilled labor at minimum wage. To accomplish this task law makers need to revise and reduce regulation for business. Incentives for businesses need to be implemented for keeping work within the United States so there is a economic benefit that outweighs doing business out of the country.
History has shown raising the minimum wage does not lead to failure, but it takes 8-10 years for the growth to happen. In most cases, people adjust to his or her income and try to live within his or her means. The same amount of time would be needed to create a surplus of jobs. By creating a surplus of jobs it benefits the majority including the minimum wage worker. The benefit also helps the economy to grow and become stronger. By focusing just on minimum wage workers we take a risk at increasing unemployment at lower levels and companies will try to do more with less.
For this change to happen we need to quit thinking capitalism is a "four letter word." Whenever a politician mentions the word it is held in the same regard as communism. Capitalism is the complete opposite of communism and we can all benefit if law makers start focusing on helping business in the United States to grow and thrive.
