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My thoughts on an increased minimum wage

June 1, 2013 by FauxCapitalist

Minimum wageHere is part of my response to a reader who proposes a higher minimum wage of $15 an hour in the United States, arguing that it can result in higher pay with minimal price increases. But I ask, what about overall employment?

“I have personally seen the case where an imposed higher than market wage has resulted in better pay with the same number of employees as there would otherwise be, and the company still being able to make a profit.

The example I’m referring to is a franchise coffee shop at the university I went to where the workers are unionized and get at least several dollars above the minimum wage.

While you are right about scenarios where an imposed minimum wage increase could result in big gains for affected employees with relatively minimal cost increases, one thing that generally will be affected is employment.

It is for that reason that I feel I don’t feel I should support restricting the job opportunities of others, and this is particularly noticeable with youth unemployment, where, due to other factors like a relatively high high school dropout rate of 15% and over, such students will have a difficult time seeking as many jobs at a highly increased minimum wage.

The university coffee shop is a special case, because of the power of the university in being able to regulate employment and competition of food options in light of a high on-campus demand.“

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Posted in Uncategorized | Tagged employees, employment, government, jobs, market, minimum wage, pay, thoughts, United States, university | 2 Comments

2 Responses

  1. on June 10, 2013 at 5:36 am David tarbuck

    An imposed higher than market price for anything results in lower than marker demand; minimum wage is no excepton.

    A betters slution is for a guaranteed income with the provision thst any PROFITS derived by employers from paying LESS than this minimum would be taxed away. NGOs on the other hand might received an inderect subsidy.


  2. on June 1, 2013 at 9:10 am bourchakoun

    Since ever more businesses are owned by big corporations raising minimum wage would of course be better, though it might put some smaller businesses under pressure as well.

    Overall historically higher minimum wages did not result in declining employment. Countries like Germany (up until 1980s), Sweden or Switzerland have or had extremeliy high minimum wages of sometimes (depending on trade) of 20-40$! That is minimum wage and employment is not hurt by it, since more people have more money to even shop at the smaller shops. And nevermind the big corporations – they can afford to double or triple wages.

    Of course in the current post-consumerism society that THEY want to erect higher wages would definitely improve life for the employed and hardly decrease employment-rates. Those are destined to go down regardless whether you implement slave-labour camps for 1$ an hour or Swiss conditions. You might as well raise them.



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