minimum wage Essay

Submitted By nickmad1994
Words: 1050
Pages: 5

Nick Madison
Professor Dobie
Final Persuasive Draft
23 April 2014 $7.25 equals two gallons of gas, a couple of school supplies, or a fast food meal. With this current minimum wage you must work one hour to earn these small necessities. This seems like it isn’t even worth your time right? It may seem like this, but I would have to most certainly disagree. The minimum wage should not be raised because it does not reduce poverty, it kills jobs, it leads to fewer jobs for young people, and it causes prices on nearly every good and service to rise. Throughout this paper I am going to try my best at giving you a clearer, logical, and broader understanding of what raising the minimum wage would do to our country as a whole. The biggest reason why many people believe that the minimum wage should be raised is because they think that our minimum wage causes poverty. In 2007, Senior Economics Policy Analyst, James Sherk, reported reasons why poverty is not affected by wage increases. One of the reasons is that the families that are living close to the poverty line are less likely to see any significant change in quality of life. The LA Times evaluated this even further by stating that “only 11.3 percent of those receiving a raise are living in poverty” (LA Times). Raising the minimum wage would have little to no benefits on the poverty percentage in the United States. Killing jobs is something else that a higher minimum wage would induce on our nation. James Sherk also goes on to claim that, “an increase in wages will scare off employers from hiring more workers and decrease the amount of hours for existing employees to even out the raise. If you raise the wage above the equilibrium wage for a specific market, then it causes a surplus to the market because the quantity of workers outweighs the quantity of job openings. Most of the estimates suggest that each ten percent increase in the minimum wage reduces employment by approximately 2 percent. This may not seem like a lot of people, but let me explain to you how many people would theoretically lose their jobs. There are roughly 143,929,000 people in the work force in the United States. If you multiply that by two percent then that means 2,878,500 have just lost their job. To back this up, a statement by Charles Fuller during the Joint Economic Hearing concerning the minimum wage verifies that raising the minimum wage will kill jobs. He says, “As an employer, today’s minimum wage allows me to hire unskilled or first-time workers and train them at a wage that is economically feasible. If you raise it, the wage will no longer be feasible and a good portion of these jobs will be lost” (Evidence Against a Higher Minimum Wage). A higher minimum wage helps only those workers who actually end up earning that wage and leaves poor families actually worse off. Raising the minimum wage would be catastrophic for the teenage population. Forbes testified that within six months of the last wage increase in 2009, 600,000 teens’ jobs disappeared. Again, “when the minimum wage is increased, a scarcity of jobs is imminent due to a higher cost to the employer” (Mankiw 119). Firms cannot pay a worker more than the value the worker brings to the firm, and teens typically lack sufficient skills for higher paying jobs. So, “raising the cost of labor raises the incentive for employers to find ways to use less labor” (Mankiw 113). One might argue that a teen could use a higher minimum wage to help save more money for college, but raising a higher minimum wage would also raise the price on the goods and services while they’re trying to save for college; which brings me to my next topic. The prices of goods and services will rise in a similar fashion as the minimum wage if it were in fact to be raised. Imagine that an owner of a pizza parlor had ten minimum wage workers employed at seven dollars an hour. Next