How Would a Raise Affect You?
By Terry AmRhein, Democracy on the Edge
buy it www.Amrheinsbooks.com
The discussion over raising the minimum wage to $15 per hour
continues to be a major issue of contention among the presidential political
candidates. Republicans are united in
their opposition to raising wages.
Hillary agrees with raising the minimum wage, but to a more moderate
level of $12 per hours while Bernie Sanders stands behind a $15 wage rate. What are the issues behind raising the
minimum rate and what would happen if the wage rate was raised?
The present federal minimum wage is 7.25/hr ($14,500 per
year) which was last increased in 2009. Some
states do have higher minimum wage rates, some are $9.00/hr or over, but most
states have a minimum wage close to the federal rate. Had the minimum wage kept up with production,
it would be $18.28 per hour by now according to the Economic Policy
Institute. Republicans claim that
raising the minimum wage will result in putting people out of work; by raising
workers wages the costs of products will increase and companies will be forced
to layoffs workers to help maintain low prices.
The problem with this theory is that if a company had excessive
employees, given the present economic conditions, employers would have already
laid them off. This is particularly true
with the slow economic recovery we have experienced; there are very few
excessive workers. (Yes, some people who
are not presently looking for a job may rejoin the labor market and hence
increase the unemployment rate. However,
this is not the same as laying off a person who already has a job.) To maintain profits, companies will be forced
to increase prices of their products and to find new ways to increase
efficiency. The burden of dealing with
higher cost of labor will be experienced in all industries alike, it will be a
level play field, and the most competitive company will perform the best. So product price increases would not be
unlimited, they would be checked by competition. This is the way it should be in a capitalist
economy.
Increasing
prices, of course, is called inflation.
Nobody likes inflation. However,
some inflation is a good thing, it shows the economy is vibrant. The United States
There are
potentially many unforeseen benefits from raising workers pay. Republican’s major objection to government is
that there are too many people on the welfare, all of them freeloaders. Increasing the minimum wage could allow
people working a full time job to earn a living wage and welfare should
decline.
The effects
of an increase in minimum wage will also ricochet among hire wage earners. When the pay of lower wage earners increases,
higher wage earner demand compensating wage increases. So in effect, all workers would benefit from
higher wages.
The biggest
benefit from higher wage though is on the national economy. With increased wages, demand for goods and
service will increase. People will have
more money and much of these funds is going to buy “things” like cars, boats,
houses and taking vacations. This
increase in spending will simulate production of products. The resulting profits could potentially out weigh
the increase in costs caused by the wage increase. And with increased production, employment
rates would increase. So the benefits of
an increase in minimum wage are numerous and the ill effects are small or
imaginary. It is the right thing to do
and it is the smart thing to do. What is
congress waiting for?
By Terry AmRhein author of Democracy on the Edge available at www.Amrheinsbooks.com
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