Minimum Wage: Research Essay 

Discussion about what to do with minimum wage laws here in America has been at a higher than normal level since the Democratic Party took over as majority leader in both the House of Representatives and the Senate in the recent midterm elections, giving them control of Congress. There has also been talk on what good can come to America’s lowest income workers as a result of a minimum wage increase, and there has been equally as much discussion over what negative effects this legislation can have on those same people. Though peoples opinion on the argument splits fifty fifty throughout the populous there is still only one correct answer to the argument which is that the minimum wage should not be increased and should be abolished entirely.

According to the principles of economics, as the price of a good increases, the demand for that good decreases, Labor can be thought of in the same context. If there is a sudden increase in the cost of labor, the demand for that labor will decrease and companies will therefore use less which would then lead to more of an unemployment rate. This could result and has resulted in an overall replacement of workers in a company with there replacement being a machine. Machines in the long run are cheaper, more efficient, and more reliable to give consistent results. There are many other arguments that consider additional ways in which an increase in the minimum wage could hurt the American economy, but they are all based on this simple point. The fundamentals of economic theory state that, holding everything else constant, an increase in the price of labor will result in a decrease in its use, and higher unemployment.

Furthermore, the whole idea of minimum wage gets rid of any sort of competitive nature in the workplace. What would be the point of competing if everyone is always going to get paid the same amount. Not only do the employees suffer, an entire industry can suffer from a national increase of minimum wage. Certain companies and industries exist out there that almost solely depend on human labor and can not afford an increase in the national wage. CEO’s and managers of these companies would combat going out of business by raising the prices of whatever product they were producing. So by keeping their employees and raising prices, companies become immediately less competitive with other companies in the industry that simply laid off employees to keep their prices stable.

There was a study done on the effects of Oregon’s mandatory annual minimum wage increase to keep up with inflation. A local eatery owner in Portland says that ‘I don’t worry about it, because if I have to raise prices, next door will have to do the same thing,’ but people who work in industries on a larger scale have run into financial distress. Oregon’s $4 Billion farm industry has been hurt the most, says the study. ‘The biggest yelps have come from Oregon’s farm industry, So while a competing blueberry farm in New Jersey can pay $6.15 an hour and one in Chile may pay even less, Oregon farmers pay $7.50’ . And a local farmer Barb Iverson said, ‘Why grow a 18 potato here when you can do it in Idaho for $5.15. How can they expect to compete? Without government subsidization in today’s flat world, they can’t. (Oregon’s Minimum Wage and DHS|OHA CaseLoads).

The case for a higher minimum wage grows even weaker when you stop to consider that there are vastly superior alternatives for steering money to low-income households. For example, the nonpartisan Congressional Budget Office has found that expanding the earned income tax credit is a much more efficient way to fight poverty than increasing the minimum wage.

Politicians who want to raise the minimum wage argue that it will reduce poverty. But the minimum wage comes with a tradeoff which is higher wages for some, but fewer jobs for others as employers cut back on hiring due to more expensive labor costs. If the goal is poverty alleviation, then the tradeoff of raising the minimum wage is not worth it. Antipoverty policy should focus on helping the nine-tenths of working age people in poverty who do not work 40 hours a week and year round. Raising the minimum wage would aid just a small share of those in poverty while creating even higher barriers to entering the workforce for everyone else.

If the U.S. could do away with the minimum wage entirely then wages could then be set by supply and demand. If employers see difficulty holding onto their staff, then they should simply pay more or have greater benefits. The interaction between the employer and employee would then set that market rate for pay. Which would also create a competitive work space and create better workers.

The new creation of a more competitive workspace after getting rid of a mandatory wage greatly improve the inners of a company. It improves a company’s morale, more efficient work time quotas, and better workers. Another benefit would be that more jobs would be available without a minimum wage. Now it’s true many of them would be at a lower wage, but young people starting out in the job market would learn useful skills and begin to build up their resumes which would then lead them to better higher paying positions/jobs. A great example on how this would work would be internships. Interns often get no to very little pay but the experience they gain gives them the opportunity to get into a certain field of work with a very high pay.

Getting rid of a mandatory wage would be good for businesses and workers. Businesses, especially small businesses,are forced to watch their budgets carefully Because of the mandatory minimum wage. Even if they want to hire more employees to improve or expand their business, the minimum wage puts restrictions on their plans.Plus the ability to provide more entry-level jobs at a lower pay can make a small business thrive then leading to more productive businesses and more future hiring of employees. Successful businesses would thrive in a freemarket economy which would then also help consumers with more choices and better prices.

Mandatory Minimum Wage has also forced big time companies to outsource for more employees. Outsourcing takes billions of dollars away from America’s economy each year, and millions of job opportunities. Outsourcing has also caused us to take advantage of poor 3rd world countries which have encouraged child labor and inhumanities of that nature. Those things would not go on in America and they wouldn’t happen from American companies around the world if we would just get rid of the minimum wage.

To conclude, there has been talk on what good can come to America’s lowest income workers as a result of a minimum wage increase, and there has been equally as much discussion over what negative effects this legislation can have on those same people. The effects of A mandatory minimum wage have destroyed the workforce in our current economy, it has stunted opportunities, destroyed small and large businesses/corporations, and has overall prevented a enormous growth our economy could have and could have had