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Thursday, November 09, 2006

 

Minimum Wage

Minimum Wage


The minimum wage has just recently been raised. As an economist student I understand the implications of this outcome. There is a market for labor, and the market sets the value, or wage of labor. A minimum wage, if set above the market wage; can have opposite effects of what the policy makers wanted. They wanted to increase the well being of lower paid workers, by increasing the wages they receive. Common sense makes the policy seem like it would work. If people get paid more, than they are better off. But, they don’t think about the jobs that will be lost. Somebody that is already making low wages is definitely not better off if they don’t have a job. Economists know that employers expect more productivity out of their employees if they are getting paid more. A minimum wage increase will cause employers to demand more productivity out of fewer employees. Many of the low or minimum wage paying jobs are taken by teenagers. These younger people do not have experience, and employers many times are giving the teens an opportunity to gain some work experience and to make a little money as well. I don’t think many employers will give these kinds of opportunities to teens, or inexperienced workers if they have to pay them a higher wage than the employer expects to gain in return. I heard an older man yesterday, while I was waiting in line at the store, talking about this. He said, “I am not going to pay a 14 or 15 year old $6.65 an hour. I gave them a chance before, but I can’t do it for that price.” I also heard that JoyRides was closing down because they can’t make a profit and pay higher wages. I think that the increased minimum wage will help some people in some situations, but there are definitely many that will be hurt at well, and from what I have heard so far I think more will be hurt.

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