barack obama

Does Increasing the Minimum Wage Work?

Increasing the minimum wage shouldn’t make much of a difference as the starting wage, whatever it is, is always going to be at the bottom. When you increase the minimum wage the wages for everyone else will go up to compensate for the difference as the person that’s been working somewhere for a year isn’t going to want to make the same as the person who just started yesterday and so on.

At least temporarily should give everyone a boost in buying power, especially those that earn the least as it would make the biggest difference to them. The labor unions like this policy because many of their contracts are tied to a certain amount/percentage over certain wages so it looks good for the unions when their memberships wages are going up.

However, then the prices of goods and services must also go up to pay for the extra labor cost unless you import products outside of the country, bring in outside workers or replace human labor with machines, which of course reduces jobs.

Also, it then excludes a group of workers that may be lacking in skills from competing for the easiest jobs since if you have to choose between two job candidates, one is slightly skilled more than the other but you have to pay them both the same wage, who are you going to go with? The skilled one. Now if the unskilled one could offer to accept a lower wage at first in order to be trained, you may go with that candidate. I was in this situation myself a few times.

If this is not how it works, then why are they being so cheap… why not increase the minimum wage to $100/hour?