For all the Theories and Statistics that have been put forth, Pro and Con, about raising the Minimum Wage, one thing continues to bother me: The assumption that increasing wages will cut into the profit margin of companies forced to implement the change.
However, this assumption is based on analyzing just one side of the question, and completely ignores the other. Let's examine this more closely.
Corporations and Politicians that criticize the mandatory increase in the Minimum Wage, play the same card over and over again; That it will Hurt Business, Cause an Increase in Labor Costs, Cut Profits etc., It is the same story over and over again.
Yet, the one thing that seems to be constantly ignored is the MAIN POSITIVE ASPECT OF RAISING THE MINIMUM WAGE; THE INCREASED INCOME THAT IS NOW AVAILABLE TO THE MINIMUM WAGE WORKER, AND HOW AND WHERE IT WILL BE SPENT. ADDITIONALLY, WHAT OTHER IMPACT CAN AN INCREASE IN WAGES HAVE ON THE ECONOMY IN GENERAL, BE IT LOCAL , STATE, OR NATIONAL?
This, of course, leads to even more questions;
- Are the companies complaining about the wage increase, also asserting that they will not benefit from the additional buying power that is pumped into the economy.
In other words, completely ignoring the positive implications of increasing wages, and focusing solely on the negative?
- Do the increased wages relieve Social Services, (Government Subsidies.), of providing aid to those who now have incomes that are above the minimum standards required to be eligible?
- That the idea of laying off workers is Beneficial. Specifically, the corresponding loss of Income Generating Activity? ( Production, Service Time, Quality Control.)
- That additional income will result in greater employee loyalty, and a positive impact on employee productivity?
Is there any evidence, either way, to see if Higher Minimum Wage Laws result in Greater Unemployment Rates?
For illustration, the following are the Rates and Ranks in the U.S., for the 20 States with the Lowest Unemployment Rates, taken from August, 2014 Reports. Also included is the Legal State Minimum Wage, and whether or not it is Higher, Lower or Equal to the Federal Minimum Wage of 7.25/HR. States with no Minimum Wage Law were also included.
STATE UNEMPLOYMENT RATE. STATE MINIMUM.
1. NORTH DAKOTA. 2.8% EQUALS- 7.25
2. NEBRASKA. 3.6% EQUALS- 7.25
3. SOUTH DAKOTA. 3.6% EQUALS- 7.25
4. UTAH. 3.6% EQUALS- 7.25
5. VERMONT. 4.1% HIGHER- 8.73
6. HAWAII. 4.3% EQUALS- 7.25
7. MINNESOTA 4.3% HIGHER- 8.00
8. NEW HAMPSHIRE. 4.4% EQUALS- 7.25
9. IOWA. 4.5% EQUALS- 7.25
10. WYOMING. 4.6% LOWER- 5.15
11. IDAHO. 4.7% EQUALS- 7.25
12. MONTANA. 4.7% HIGHER- 7.90
13. OKLAHOMA. 4.7% EQUALS- 7.25
14. KANSAS. 4.9% EQUALS- 7.25
15. COLORADO. 5.1% HIGHER- 8.00
16. TEXAS. 5.3% EQUALS- 7.25
17. MAINE. 5.6% HIGHER- 7.50
18. VIRGINIA 5.6% EQUALS- 7.25
19. WASHINGTON. 5.6% HIGHER- 9.32
20. WISCONSIN. 5.6% EQUALS- 7.25
FROM THE ABOVE WE FIND THAT- 13 STATES HAVE A MINIMUM WAGE EQUAL TO THE FEDERAL MINIMUM, 6 HAVE A HIGHER MINIMUM WAGE AND 1 HAS A LOWER MINIMUM WAGE.
SOURCES- U.S. DEPT. OF LABOR- WAGE AND HOUR DIVISION.
BUREAU OF LABOR STATISTICS.
Look for PT 5.