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Misconceptions Of Raising Minimum Wage In California

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Minimum Wage Understandably, there are many misconceptions about the raising of the minimum wage in California and its social and economic effects. Just like many political topics, whether to raise the minimum wage or not is a very divisive issue. Some believe it is necessary to keep pace with the cost of living. Some believe wages will set themselves naturally to the market. If raised, how will increases in wages and costs for doing business impact inflation? At what point do business get hurt if at all. Is there any affect on higher wage earners and those with higher educations? There is no clear evidence that increases in the minimum wage spark an increase in inflation. While the raise of minimum wage can sometimes hurt small businesses, it will help combat inflation and help give a financial boost to hardworking adults. …show more content…

On account of the increased wage, employers of businesses struggle with the increased cost of labor. This leaves them few options such as letting workers go or raising the price of their product. For example, “Former McDonald’s CEO Ed Rensi says a higher minimum wage will cost jobs and lead to the closing of many small businesses. In theory, raising minimum wage forces businesses to raise prices, which spurs inflation. But since wages are only part of the product costs that consumers pay, it’s not that simple.” (Investopedia, par. 2) So it is safe to say, that although minimum wage seems like it causes inflation through businesses’ need to raise prices, it is not the

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Raising the minimum wage has been one of the biggest debates during the 21st century. One side of the spectrum argues that raising it will make it so they have a living wage, while the other argues that raising it will hurt the economy. Whichever the case is, people are clearly divided on this issue. Before Oregon passed the 15 dollar minimum wage law, people wrote arguments to try to either prevent or pass this law. The article, “How a $15 minimum wage would affect a real business: Guest opinion” by Lee Spector argues that raising the minimum wage would hurt small businesses like the one he earns.

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In the book The Minimum Wage by Opposing Viewpoints they say that the minimum wage does hurt small businesses. In the book it says “A 10 percent increase in state minimum wages is consistently associated with a 1 percent reduction in retail employment and a 1 percent reduction in small business employment” (Viewpoints 72). Every time an increase occurs by 10 percent than in effect to that a 1 percent reduction in retail and small business employment. This shows that the minimum wage increases has a huge impact on the small businesses and also the retails. When the wage in increased then the small businesses can’t afford to employ all these new people.

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They said that they are not able to raise their prices to afford this and cover their expenses. Also, they state that they have reduce the amount of the minimum wage employees or reduce their work hours which will effect both the owners and employees negatively. Furthermore, raising the minimum wage will effect economic negatively. The economists concluded that as a result of the wage increase, "many prices will increase, including those that lower-income households commonly face; wages will raise for those in minimum wage jobs that remain employed; employment opportunities for those at the bottom of the skills ladder will be diminished and employment growth will

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Considering its role in setting remuneration standards, the minimum wage affects other factors of employment such as the availability of jobs and the citizens' purchasing ability. Therefore, it causes a decrease in employment to some extent and enhances the household, individual, and family income. The primary role of the federal minimum wage is to ensure that workers are not underpaid and that they are not exploited by their employees (Manzo, & Bruno, 2014). Actually, the determination of the

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1511 Words | 7 Pages

A writer from the American Legislative Exchange Council states, “Small businesses face a very competitive market and often push profits as low as the can to stay open” (RaisingThe 7). In a catastrophic scenario, such as a large increase in payroll, these businesses could be forced to close. Many small businesses face a very competitive market with large corporations, and an increase in minimum wage would decrease their profit, stifling their potential for growth. This growth of small business is essential to the economy, as they provide innovation and job opportunities. If the futures of small business are put in jeopardy, so is the escalation of these important job

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Rather, with an increase, the government may benefit, as people want to spend their new ‘excess’ income. Also, small business owners do not seem to be fearful for the increase of minimum wage, as he majority believe people with lower incomes have a higher marginal propensity to consume. It is nonsensical to believe that this raise will hurt the economy, since the minimum wage has been increased numerous times since it was created as a part of the New Deal. Overall, raising the minimum wage is a necessity to the vitality of the American people who are struggling to support themselves and family.

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Many citizens of California would naturally think about prices of products when they hear that the minimum wage will increase. An online article, by PewResearchCenter, says that “..Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation”. Even though this was news a few years back, it still shows the effects of having a raise in minimum wage. It shows that 8.1% being purchased have been increased into products. There will be no point in raising the minimum wage if the price of products goes up.

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Many politicians, business owners, and citizens hold fast to the belief that heightening the salary attached to minimum wage positions will yield negative benefits for our society. This opinion is supported by three vital view-points. The first can be found in the news article, “The Argument Against Raising Minimum Wage.” It expresses how the enlargement of this payment will take a toll on employment. The document reasons that if the amount of money employees earn is expanded, companies will be less likely to hire as many workers (Huppke).

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With the minimum wage increased, these stores will be forced to compensate for the extra expenses by increasing the price of their products (Clark). A study by Purdue University discovered that raising the minimum wage to $15.00 per hour would raise the cost of food served by restaurants and fast food vendors by 4.3% (Minimum Wage - ProCon.org). Additionally, NBC News found raising the minimum wage in Oakland, California to $12.25 resulted in a price increase of coffee by 10% to 20%, and by 6.7% in Chicago after the minimum wage was increased to $10.00 (Minimum Wage - ProCon.org). The same theory applies to all businesses that hire minimum wage employees. As a result of price increases, the amount available in a buyer’s disposable income will decrease and they will be unable to afford their previous lifestyle.

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According to the Federal Reserve Bank of San Francisco, this is because as the cost increases to pay workers for low-skilled labor, businesses will instead put their money towards equipment that can replace workers. Another option would be to hire less people while ensuring the fewer amounts of employees are extremely efficient. On top of that, higher employee wages will generally lead to increases in prices of products which will reduce demand for product and labor (Neumark, David). This will generally only affect people currently working minimum wage jobs – which is exactly who an increase in minimum wage is trying to help – since higher paying jobs already pay above minimum

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1506 Words | 7 Pages

The article, “What Are the Pros and Cons of Raising the Minimum Wage?” written by J.B. Maverick, a commodity futures broker and stock market analyst, provides a list of the pros and cons of the debate about raising the minimum wage. The article argues that, “among the disadvantages of increasing the minimum wage is the probable consequence of businesses increasing prices, thus fueling inflation” While this statement is partially correct, it is entirely misleading. Business prices will increase considering they are paying their workers more. Nevertheless, with the employees getting paid higher wages, more money will be put into surrounding businesses, causing a sustainable and well-functioning economy. While increasing the minimum wage will cause inflation, “our model-based analysis suggests that the Federal Reserve’s tolerance of higher temporary inflation could support any expansionary effects of a minimum wage increase and mitigate any contractionary effects''

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637 Words | 3 Pages

If it is raised it will hurt the economy, businesses, and even the same workers its supposed to help. History shows that in the past raising the minimum wage causes inflation. Minimum wage is the

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During the Obama administration there has been a call to rise the minimum wage to $15.00 an hour. Those who support the rise claim it is a only “fair” for workers to have a “living wage”. Those who against the rise of the minimum wage say it would have a negative effect on business, small business especially. Business should not mandated to provide to provide a minimum wage based on the governments’ say. In fact I believe the minimum wage should not be raised at all.

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For instance, from the article “The effects of minimum wage” by David Neumark states that employers will try to keep away from low-skilled workers if the wage were to increase because it would cause them to be wasting money to train them; especially for students and high school graduates who are in absence of any work experience. With minimum wage increasing for the past couple of years it makes it difficult on employers who run small businesses to hire more new workers because they too are also citizens that have to pay their taxes and extra just to keep their business up and running. Such as the author Gina Kim who wrote the article “Minimum wage: helpful or harmful for small businesses” states that 85% of small businesses pay workers a bit more than the minimum to keep their workers interested in the job and they have to make profits out of their business to keep it on track. These businesses cannot innovate if the wage increases because then the labor market will pick up the prices on materials as well creating more of a problem for small business owners to keeping their company open for as long as possible and their solution would be to not hire a lot of employees. This pretty much explains the reasoning about how it will be troublesome for new fresh workers trying to just gain experience and get hard earned

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In the past three years, many politicians and labor unions have been pushing for an increase in minimum wage. Minimum wage is the lowest set wage by a law of a government body. An increase in minimum will benefit some people, and hurt others. An increase in minimum wage will cause benefit in the short run but will be very damaging to the economy in the long run. There should not be an increase in minimum wage because it is unhealthy to the economy in the long run and it will be the major cause of job loss, increase in inflation, competition, and the price level of goods and services.

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