The Federal Minimum Wage Increases This Week - Are You Getting a Pay Raise?

Abolishing the minimum wage would only further exacerbate the gulf between the affluent and the impoverished by allowing the more established businesses to operate with an even lower wage floor. If anything, cheapening labor this much would result in an even more pathetic service sector, and an even worse service experience for customers. That is, unless you happen to enjoy the "Stepin Fetchit" experience.

Make no mistake - over a million workers are earning less than the minimum wage. Waiters and waitresses in some places are paid less, and make up the rest in tips. Undocumented workers are sometimes paid less. There are some immigrants who are enslaved by their smugglers. Strippers work for tips. So do some "bar backs" and "waitresses" at night clubs in some cities. You can look this up at the BLS or click my link.

On the flipside, in a state like California, anyone who works is likely to earn more than the minimum wage, because unemployment is relatively lower than elsewhere, and the cost of living is higher. The high cost of living can translate into a higher barrier of entry into the conventional workforce -- so someone who is very desperate may turn to the underground economy first, to get enough cash to afford the expenses of working in a conventional job.

That's where these illegal sub-minimum jobs can appear. For example, suppose you need to make a quick $50 and you have no job. Not only that, but, you're poor and have no interview wardrobe. What to do? Well, you can start by odd-jobbing in any bazaar-like marketplace. Hold a sign, or pass out flyers. The benefit is that the hours are "now" and you don't need nice clothes. These jobs are a mixed blessing - it's good to be able to work, but, you don't want this kind of work to be too common.

If you got rid of the minimum wage, this kind of style of work would spread into the conventional, more above-board workplaces. Is this something we want?

There's a living example of this in Mexico. There, at Wal-Marts, boys will bag your groceries and carry them to the car. These boys are not paid by Wal-Mart - they work for tips - yet, they also work within the store when they're bagging. This is the norm in Mexico, according to Wal-Mart spokespersons.

Is this the situation we want for ourselves?

I would rather that a day's work earn a fair day's wages. Enough to live on, and a little bit extra to save for the future. Minimum wage isn't that, but it's a step in the right direction.

Some have argued that a raise in minimum wage would hurt small businesses . . . 91%, of small businesses already pay their workers more than the minimum wage so there is not much for them to worry about.

I don't think I could have refuted this better than Sam did, so I'll just second his opening paragraph. :)

Yes, I realize that if we're talking about people who's wages are affected by a minimum wage increase, we're often talking about the "working poor" and we should be sympathetic to people who only earn that much. But, perhaps it's these very people who need some flexibility in the work place to get ahead. Consider a "receptionist" who settles for minimum wage but who learns to process bills and payments for a small company that needs her to do that as part of her "receptionist" duties. Perhaps the added skills and experience (which can be documented on a resume and backed up with a reference, no less) leads to a better position a couple of years later.

And yes again, if we're talking about a business that is going to be affected by raising wages less than a dollar, then perhaps this isn't a very stable business to begin with, and one could question whether it needs to exist. Welcome to the world of small business entrepreneurship! If an entrepreneur is willing to just get by financially for the privilege of setting his own hours, not working for someone else and/or doing what s/he loves, all the while providing local products and services and *creating jobs* for those who obviously wouldn't otherwise be earning six figures elsewhere, then more power to the business owner!

I'm all for people earning a fair wage for a good day's work. We have to remember, though, that small businesses have their own unique set of issues. We often assume that those with little experience or skills end up working in large, corporate-backed environments; we forget that small local businesses that need "another body" to relieve a stressed owner-operator often "take chances" on those less skilled but whom they can afford. The minimum wage rate definitely affects these operations.

While I'm not necessarily saying "abolish minimum wage" I do think that the issue needs creativity and flexibility, not one-size-fits-all legislation.

The minimum wage does very little for the poor. What it does do is raise the cost of products for everyone including the poor. Since this is the "only" significant legislature the current congress has passed, maybe we should say thanks.

The minimum wage laws are 'feel-good' populists' ideas which don't help anyone. If you are working for minimum wage right now and don't want to, don't. Even the illegals standing on the corner 7 to 8 dollars an hour and that's with a lunch. I know that for a fact.

It's another case of 'the government knows more than everyone else'. Yes, the government certainly has the smarts to figure out what a minimum wage is. If you believe that, I'll sell you a $600 hammer!

Minimum wages ties the hands of entrepreneurs. What typically happens is they end up hiring less people, or, better still, hiring under the table. Artificially propping up prices by government edict also causes prices of good to rise. Inflation.

Please repeat 3 times a day - government dumb, government dumb, government dumb.

I find it fascinating that the majority of people are willing to abdicate their liberty to a faceless government. In essence, have someone else relieve them of responsibility.

No big raise here. I am still waiting for the government to decide they want to pay stay at home moms. lol

First, I agree that the minimum was is destructive to the young, the uneducated (high school drop-outs, etc.), the inexperienced, the immigrants. Ask yourself if you are inexperienced - would you rather get an experience or a high paying job? You get experience and then climb up the paying ladder. For example, the teenage unemployment is quite high (in 20% or more). These teenagers would most likely get a job if the cost to employ them was not set by the socialists/politicians artificially high.

Second, if you care about the "poor," why don't you set the minimum wage at $50/hour? What the heck, make it $100/hour. Imagine how you can raise the standard of living!?!? Isn't it the "compassionate" thing to do? Hehe... not exactly, because many jobs at $100/hour will be instantly eliminated, thus rendering those intended "victims" unemployed.

Third, the unions are in favor of the minimum wage, because at the bargaining table they say, "hey, look at those stupid, ignorant, unskilled bums who are getting $8/hour. You can't give us $8/hour, we deserve $14/hour as a starting salary." The cost is passed to the consumers and we pay for it. No wonder, many unionized manufacturing jobs are being lost, because of the artificially set prices (for labor) by all-knowing politicians.

Lastly, the free market, albeit not perfect, is so much better than the centralized, planned, socialist economy. Sadly, there are more and more sectors in the economy of the USA that are turning socialist and/or semi-socialist.

P.S. Who is in favor of raising the minimum wage to $23.75/hour? If you oppose it, you are "mean, cruel, uncaring beast who has no heart."

The Economic Policy Institute has a great collection of articles and charts and statistics that show just how important a minimum wage is in this country, and why it needs to be higher. Some people have always argued that the minimum wage will hurt low income workers by erasing jobs, but it has never happened. It transfers wealth to the lower section of our economy, which can lead to overall job growth. Wall Street folks may not like it, but Wall Street likes plenty of unemployment too, to keep labor cheap and profits high.

http://www.epi.org/content.cfm/issueguides_minwage

Here's an idea that helps employers and workers:

Instead of raising the minimum wage, Congress could set a sort of "target" wage with a partial subsidy (refundable tax credit), and repeal the minimum wage. Let's say this target wage starts at $7 per hour.

Employees would be free to pay any wage - since the minimum wage would be repealed -and the employee could file for a refundable tax credit equal to one-half (target wage ($7)- his wage (say $5) times the number of hours he worked.

So if someone works full time (2000 hours) at $5/hr, he could get a subsidy of ($7 -$5)/2 x 2000 = $2/2 x 2000 = $2000. If he worked only 1000 hours, he would get only $1000. (Perversely, today's minimum wage worker maximizes hie Earned Income Tax Credit by working only half-time, and his tax credit decreases as he works more hours!)

This imposes zero cost on employers, increases employer options, and incentivizes workers (who always come out ahead from working more hours and/or earning a higher wage).

@PJ & others

The MW isn't as strong as it used to be. There are exemptions from the law, for young people, for waitrons, and for some jobs where people work only for tips. There are also a lot of informal jobs out there, too.

As the MW has lagged, since the 80s, salaries for highly skilled workers has increased.

Back when the MW was higher, the higher salaries were relatively lower. What this really meant was that someone making MW could afford to purchase the services of someone paid fairly well. Someone making twice the MW could afford to go to a doctor and pay cash for services. Could someone making $US12 an hour today get seen by a doctor, without insurance, and pay cash? It's not that easy anymore.

Today, some of the unskilled end up in criminal markets as the lowest paid workers. Then they end up in prison, where they can work for the prison for 30 cents an hour. They compete with all low-wage workers and some high-wage workers.

The immigrants end up in sub-MW underground jobs, too, but they make out better. But, they still compete with above-ground jobs and cause wages to fall.

A rise in the MW will cause investments in technology, but investment in technology is good. It creates not only the jobs for engineers, but many more jobs for technicians to repair the technology, and it also helps increase productivity overall, which is good for the economy.

Raising the MW does contribute to higher costs and inflation. It increases prices for things made with minimum-wage labor, like hamburgers and janitorial service. It doesn't really raise prices for more expensive things that are less affected by the MW. For example, a 50 cent raise in wages is $4 a day, or $800 a year. That is enough to purchase a computer -- and the computer prices aren't going to rise by $800 because of a rise in the MW. That computer purchase would create jobs for people who make a little more than MW and sell computers online.

Of course, the rise in MW will affect the cost of food - so food will rise - but food is not 100% of one's budget. It's more like 20% to 30% if you're poor (and closer to 10% if you're middle class). So you're still keeping the bulk of your raise, and are still able to afford a capital good that can help you improve your skills.

The rise in prices doesn't affect everyone equally. In fact, it does hurt the poor more. But that pain is coupled with a raise that more than mitigates the effect.

The pain the wealthy feel at the checkout line is miniscule - they don't care if the hamburger is $2 or $2.25. The wealthy people feeling the pain are those who employ MW labor - if they employ 20 people at once, and they each get a $4 daily raise, that's $80 less the owner gets to take home each day. That's more than $1,600 a year. The way they see it, a rise in the minimum wage is less money in their pocket to support their lifestyle.

Personally, I'm a big fan of union militant computer geeks, and I'll help them any way I can. Look up Michael Hauben, a union militant computer geek. As a young man, he fought for the right for Ford factory workers to fund their own computer skills training center, so they could prepare themselves for the technology revolution that PCs were ushering in. That union program got shut down by Ford. Now, where are those Ford workers? They're fearing for their pensions as their old industry declines.

Did the wage increase help? The government gets more tax money..the exemptions took more..it may have paid more on a debt for some.. Explain something to me...how is it that America ..the land of freedom, the right to breathe live and work is so freely able to LABEL people? The working poor...hmmm...blue collar...hmmmm managers, officers, government workers ..you have the general idea. All this talk about how it hurts others while others prosper..hmmmmmmm now what would you think if EVERYONE IN AMERICA made the exact same amount? You went to college to broaden what you could learn..(a choice either made by you or by money in the family tree currently..but a choice for every American if the wage were the same... (I am a college graduate..with three majors so don't think you are talking to the working poor) Well, I have a far different sort of opinion: everyone in America work different jobs because each of those specific deeds need done in some form or another. It doesnt make what the President in the United States does any diffrent than the person that serves the food..cleans the home..washes out a toilet does..they are ALL necessary things to be done. I have done jobs from food service to executive jobs..one pays more than the other yet they all do the same thing. Put food on the table, clothe your bodies, make a living of a sort for all of America.Provide a source of happiness. The higher the job..the more I see people label others and look down their noses. Even if they once upon a time did that same job. Realistically thinking why are YOU better than the person who feeds you in a restaurant? Why are they being judge as if they do their services well..and you decide whether you tip or not? Its not mandatory..YET. WHY are you labeling people????? Why should that small business suffer...and someone who created an idea make more? If all interprises paid the same wage to everyone..perhaps they would work harder to provide us all with quality merchandise instead of merchandise that falls apart in a months time. How well I remember the times when a person took pride in what they do. Now adays it is all about greed instead of the appreciation of living and in its beauty. Sit back, reminisce and really think about it. It sure would be less stress on America if we didnt constantly have to worry where the next penny drops. You could still live the same quality of life you live; it would just take more time to save your pennies to get to that quality of living. I sure hope its not you that tomorrow looks down upon. I have been there.