Instead of workers being paid according to what they bring to a firm/company, they are immediately assumed to be worth the "minimum wage", which itself is nothing other than a completely arbitrary number. Instead of allowing unskilled workers to advance themselves, people are expected to bring the minimum wage in terms of added value to a firm/company. The minimum wage impedes voluntary agreement that would otherwise be reached between individuals seeking a mutually beneficial contract. The minimum wage can not lift people out of poverty, how could it? If it did then we could just keep raising it until everyone was wealthy. What the minimum wage does do, however, is keep unemployment above where it would otherwise be.
Let's say I am a shop owner of a dollar store, but it's a very small business and don't make anywhere near the amount of revenue a large chain store like Wal-Mart makes. I would be willing to pay a person $5 an hour to stand at the door and greet customers. But because of the current laws, I would have to pay that person $8.25 an hour, which by my reasoning I cannot afford to pay a person to stand there as the amount of people a greeter will attract to my business is not enough to offset the costs of hiring that person. Therefore it would be illogical for me, the business owner, to offer such a job opening. If we were to abolish the minimum wage, more jobs like these would spring up. This would help the poor greatly by opening more entry-level positions.
Let's keep it simple.
Let's say that The USA raises the Minimum wage from $7.25 to $9.00. Now, let's say a company starts up and they are hiring part-time and full time (a very likely situation). Full time workers work for six hours and part time work for three, and Full time workers work 5 days a week while part time workers work two days a week. Let's say they have moderately experienced employees that work full time that put in $9.00 of work per hour every hour and get paid minimum wage. This is a net gain of literally zero dollars. Now, let's say the part time workers are inexperienced teenagers and minorities. Let's say they are only capable of putting in $4.00 of work an hour every hour. That company is hemorrhaging five dollars and hour. That comes out to 15 dollars a day, and 30 dollars a week. If companies are forced to pay minimum wage to these inexperienced workers, they will easily start losing money before they even start selling.
This causes businesses to raise their prices to compensate for their losses. Eventually, they can't raise their prices anymore so they take loans from the banks to finance the businesses. This causes banks have to shell out more and more money for other people who want to start businesses. Banks will have to raise interest rates to compensate for any lost money. Raising interest rates discourages possible business owners from making a business, and so on and so forth. It's a cycle that minimum wage most certainly does not fix in any way shape or form.
The poor need jobs more than anything; a few scattered welfare checks to not do anything to straighten out a "prole's" life. But when the minimum wage gets raised significantly, thousands upon thousands of jobs are either lost completely or seriously downsized. Since the myth of minimum wage not being a "living" wage is just that, I cannot in good conscience support raising it.
This should really be no minimum wage. Nobody would work for $0 and if there was no minimum wage theoretically there would be a lot more jobs available. That means if you're not happy at your current one you could easily go somewhere else, which means your employer is probably going to want to pay you at least what you're worth to try to keep you there. And if you could be paid less, everything else would be cheaper as well which means you really wouldn't be making less, your paycheck would just have a smaller number. The number is actually meaningless and arbitrary. What really matters is how much people actually produced.
Wages are dictated by supply and demand. The supply of willing and able workers across skill levels and the demand for those workers at every given pay level. Imposing a minimum wage price floor doesn't make any individual worker more productive, it just in most cases makes it illegal to employ them at their actual market determined productivity level. Therefore any drastic increase such as an artificial price floor of $15 is likely to cost the lowest skilled workers their job and prevent new workers from being hired.
If you raise the price of something, in this case, labor, the demand falls. So, although raising the minimum wage is intended to help the poor, it actually has the opposite effect. If raising the minimum wage was so effective as to raise people out of poverty, it would stand to reason that any country could solve their poverty problems just by forcing employers to pay their employees more. This is obviously absurd. When low skilled workers enter the labor force, the only weapon they have is to offer their labor for a lower price. And, this allows them to get the on-the-job training so they can eventually move to a higher level of pay. By forcing a minimum wage, low skilled workers might not ever get the chance of gaining this experience and they'll be stuck in poverty indefinitely.
Only an economic imbecile would price themselves out of a job. Many jobs are not worth more than 7-8$ an hour. By raising the min wage, many once employed people will find themselves out of a job. I suppose liberals prefer unemployed people compared to employed but making a lower wage....
It get so boring and annoying to hear the Republicans, Tea Partiers, and Libertarians keep moaning that increasing the minimum wages results in thousands of lost jobs; when in facts, it increases the number of jobs.
This lie is spread by the wealthy solely because it cuts into their egregious profits; they don’t shut down their business and stop hiring; it is a myth to make us feels sorry for these crooks that in most cases are part of the tax gap, which means they do not report all their sales and income on their Federal income tax returns and underpay their fair share of income. The Tax gap in 2006 was $385 billion.
These small business pay extremely low wages and provide almost no benefits; but, the owners have fancy cars, multiple homes and vacation homes and send their kids to the best schools; while their workers get nothing and usually will never be able to afford a cheap home.
The Bottom Line on Minimum Wage and Job Growth:
Two decades of rigorous economic research have found that raising the minimum wage does not result in job loss.
Here is another fact, Canada's min wage is about 10$ per hour, even for waitresses, plus tips; and Canada has Universal Health Care, and the business do just fine and the workers don't have to pay thousands a years for great medical care.
Raising the minimum wage is beneficial to the poor. The very poorest in society are those who are making minimum wages. If we raise their wages they will clearly be making more money and be able to put more money back into the economy, which is good for everyone. The myth that companies will not hire people because of taxes or because of wages is just not true. Businesses hire enough people to get the job done regardless of if they save money paying taxes or save money on wages. They will never hire more people than they need to.