Minimum wage hike kicks in Tuesday
A minimum wage increase affected 20 states on Tuesday. This was the first in a series of wage increases. The wage increased from $5.15 to $5.85 on Tuesday and will increase on July 24, 2008 to $6.55 and then on July, 24 2009 it will raise to $7.25. The last wage increase was in 1996 and 1997 and was a two step increase. Because there are 30 states that have a minimum wage that is already above the federal wage only 20 states were affected by the increase. According to the Economic Policy Institute more then 70% of workers already worked in the states that were not infected by the increase.
The director of the labor law policy at the U.S. Chamber of Commerce, Marc Freedman says “the higher federal minimum wage could mean fewer hours, fewer pay increases for other employees, benefit reductions, job losses, and waning job creation”. “In particular, in the small-business sector where companies have restricted cash flow, any time you have arbitrarily increase labor costs, they have to cover the costs in some ways.” Freedman also says “They have to pay more and get nothing out of it.” So would you say that this is an external benefit?
2 comments:
[This comment is from Chunzi]
Even the minimum is increasing; the hours of work for worker do reduce or stay at the same level. For the workers who still work for the same amount of time as the hours they worked before the wage increased, they are benefited as the total benefit equals to the same hours times increased wage. For the ones who are reduced the work hours, the benefits they get either don’t change or reduce. Also, different states have different wage increase. I think that increased minimum wage lead to job loss is relatively exaggerated as the balance after increase is still almost the same.
I think it is difficult to judge the change that minimum wage increases have on economy because different businesses react in vastly diverse ways, and we also have a hard time separating the short-run and long-run affects of the increase. I remember when Ohio's minimum wage was increased, those that worked for minimum wage were excited at first. Then we quickly began feeling this change in our communities when small businesses had to inflate their prices to compensate for the increase in payment to their workers. Is the rise in minimum wage becoming inevitable just like inflation?
Post a Comment