Ali Woodruff
Econ 200
8:00-9:48 AM Tuesday and Thursday
Sunday, February 22, 2009
Understanding Minimum Wage
Last night I was talking to a girl on my floor named Kayleigh. I asked her what she planned to do for the summer. She mentioned that she was going to go back to the job she had last summer as a life guard for her local pool. I thought that sounded like a good idea. I mean, it is a job and those are pretty hard to come by now a days. Then she commented that she hoped minimum wage would go up again so that she made more money. My mind immediately went to economics mode. I asked her how much money she made last year. She wasn't shy about it and said that she made $7.25 last summer. The reason she wanted it to go up again was because she felt that it was unfair that she had worked her way up to $7.25 and now everyone was going to make that much with the raise of minimum wage to $7.25 this summer. She thought she should get a raise so that she still made $.25 above minimum wage. I started to explain to her what was wrong with this. "Kayleigh," I said, "you do realize that if it goes up again then all types of other things are going to go up in price. Employers don't just bit the bullet, they made the consumers pay that extra money by raising their prices." She looked slightly confused. "Think about it," I continued, "They don't want to make less money. Especially now when they are trying to make all they can just to stay in business. That is the same reason why you aren't getting another raise so that you still make $.25 above minimum wage. They can't afford it. You may not even be able to get your job back at all since they would have to pay everyone more. Employers wouldn't hire as many people because there would be the same amount of money in the pot, but they have to distribute a larger percentage of that pot to their employees then they did before." She looked somewhat enlightened and I felt intelligent, which is always a nice feeling. "Hmm, I guess I never thought of it like that before. It does make sense though. Okay, never mind, I guess I don't want minimum wage to go up," she said. My work there was done. :)
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Yeah, I have found that overall most people do not understand this concept. However, we also have a state minimum wage which for a time was lower than the national minimum wage. Ohio was one of the only states that had a lower state minimum wage until about 2 years ago.
ReplyDeleteI agree with your points about raising the minimum wage. Its interesting to note that if the minimum wage were raised that the burden would be placed on the members of the pool as their membership fees would increase. Such an increase may be deemed unacceptable by certain individuals and they would decide to not even join the pool because after all, it is a luxury item. So even though raising the minimum wage might initially help out the employees, it could end up hurting them in the long run say if less employees were hired or if the pool shut down as a result of low membership.
ReplyDeleteI have been interested in the whole 'raising the minimum wage' issue for a few years now since discussing it with my dad. He has worked in the fast food business since before I was born and has spent most of that time as either an owner/operator or directing several franchises. So, minimum wage has definitely impacted what he does especially as it goes up. I, like Kayleigh, used to cheer when I heard of an increase in minimum wage thinking that it would make a lowly paycheck for an unqualified teenager like myself thicken up a bit. My dad however took me off of that high horse real fast one day as he explained that an increase in minimum wage really meant that a guy like him would hire less kids like me because affording them only got more difficult as minimum wage increased.
ReplyDeleteI can related to this story. I was a waitress at skyline chili for 3 years making $3.18 an hour. I got really decent tips but I did not think it was fair that waitresses and waiters did not get paid even close to minimum wage. I know I made nice tips but there were slow night where I wouldn't make over 20 bucks. This always frustrated me when this happened and I always thought if they raised the minimum wage, they would have to raise a waitresses pay as well, but raising this would also limit me in other spending ways and also maybe the hours I was getting would be cut to save the company money or maintain the costs. I am glad I understand the way it works now can accept my lower pay if I go back this summer.
ReplyDeleteYeah, it is true that the businesses would have to raise costs after raising wages. However, how low should the minimum wage be kept for the sake of the business? If minimum wage doesn't change with inflation, how are employees supposed to be able to participate in the economy? Granted, most lifeguards are only seasonal, but the point made in this blog is definitely rooted in a greater philosophy. It comes from the businesses point of view, and it's the reason why jobs are being taken to other countries. The prices will be less, but at the expense of the American blue collar worker. So it comes down to which is of greater interest to a company: the bottom line or the dignity of workers.
ReplyDeleteCharles Penvose
ECON 200 8:00 Tuesday and Thursday