Increase could hurt workers

 

By NICHOLAS TRUJILLO

No one works at minimum wage in my family except me. I’m the youngest. A proposal on the November ballot would not provide a whole lot of improvement.

Proposition 206 would increase the minimum wage from its dormant state at $8.05 an hour to $10 in 2017, then slowly creep to a ceiling of $12 an hour in 2020.

At first it looks good because that means more money in your pockets if you work at minimum wage. You get to circulate more money into the economy. Go you!

You can now become a contributing member of society to our free market in the US of A.

It’ll start potential job growth in all fields, as shown by the Economic Policy Institute in 2006. The Institute said a wage increase would create 85,000 jobs, and they weren’t wrong.

The unemployment rate for Arizona went from about 4.2 percent to 3.7 percent in 2006-07, according to the Bureau of Labor Statistics.

Take a look at what happened next, however. After it dropped, unemployment quickly spiked back up to even higher than it was in 2006, to a little over 11 percent.

Of course this was before the 2008 recession, and I’m not saying that increasing the minimum wage will definitely increase unemployment in 2017.

I am saying the Bureau, and many minimum-wage working Americans, didn’t factor in long-term effects. Those effects include inflation for products they normally buy, and a shortage of popular items.

While the rise in minimum wage may have motivated people to search harder for jobs, it didn’t necessarily mean employers were looking to hire more people.

Of roughly 1,200 business and human resource professionals surveyed by the Congressional Budget Office, 38 percent said they would lay off some employees. Another 54 percent said they would reduce hiring levels in 2006.

So much for the .5 percent decrease in unemployment.

Why don’t we talk about relativity? It is true the minimum wage has not kept up with inflation. It was $6.75 in the new millennium, when rich people were making money faster and the poor were losing it faster. As always, though, there’s a but.

A pay raise won’t make everything else static. We’ll see price jumps in just about everything we buy.

Beef ribeye steak currently costs $5.99 per pound at Frys. After the 67 percent increase in wages, how do we know Frys won’t raise its prices by that much? Prices might get raised even more, because grocery stores have a plethora of employees.

Inflation is very real and it happens very quickly.

And will businesses even provide raises? The other option is to just fire employees

Yes, the minimum wage will have great impact on the economy and on the consumers in the economy. However, the little people will only reap benefits for a short time before prices increase.

In a perfect world, a wage increase means people spend money on items beyond essentials, without causing inflation.

But let’s face it, America isn’t perfect and neither are we. An increase in the minimum wage will only hurt us unless people make big and, more importantly, right decisions.

Nicholas Trujillo believes in both sides for minimum wage but doesn’t trust Americans to make the right decisions with the pay increase.

Filed Under: InsightOpinion

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