26 February 2014
Not the Time to Raise In 2007, an experiment was conducted in American Samoa where they increased the minimum wage to the equivalent of the U.S. minimum wage. It did not boost purchasing power, instead unemployment stipulated to more than 35%. Minimum wage is the talk in the white house and capitol buildings across the nation. Although raising minimum wage could help reduce poverty, the government should not raise the minimum from $7.25 to above nine dollars because it is guaranteed to create more jobless Americans and the cost of living will go up due to inflation. If minimum wage were to raise one guaranteed effect would be more jobless American’s. Last time minimum wage increased, in July 2009, Neumark estimated a loss of 300,000 jobs. David Neumark is an economist and professor of Economics at the University of California. Once companies have to pay more for a single employee they will look elsewhere. Such as outsourcing; going to other countries for labor at a cheaper somewhat more efficient price. Why keep paying a stacking rate for one person when you can pay one lump sum for a robot? This is the age of technology. Companies have already started replacing humans for robots due to cost and efficiency at the current minimum wage level. Almost doubling the minimum will give them that push to go all robotic leaving Americans jobless.
Due to inflation, the cost of living will go up if workers hourly wage is increased. Inflation is the increase of general price level of goods and services in the economy over a certain time period. When prices rise the value of the dollar decreases. Assess the theory of cause and effect; increasing minimum wage would mean companies would have to pay more for their low skilled employees, in order to compensate for the loss of cash, due to the cost of one employee increasing, companies have to raise the price of their product. McDonalds, for example, doubling workers’ wages would raise total cost 25%. The dollar menu would no longer exist and raising the prices would drive the customers away. Some people say raising minimum wage will reduce poverty. Evidence shows that workers at Wal-Mart superstore each receive about $5,800 worth of safety-net benefits annually: by raising minimum wage shoppers will pay that