The House of Representatives passed a bill on July 18, 2019 to increase the minimum wage in America. The bill will see a gradual increase of the minimum wage to $15 per hour by 2025. It will also phase out the minimum tip wage that workers are paid. According to the bill, it is expected to lift 1 million Americans from poverty. It sounds great, doesn’t? However, I’m not going to lie. This bill may make things worse.
The minimum wage will be increased, which means that employment costs will go up. To offset increased costs, they reduce the number or raise the price of goods. The employment rate is likely to fall if the number or quality of jobs are reduced. However, it will increase if the employees are less skilled. Studies have proven that teenagers and those with low skills are less likely to find employment if the minimum wage is raised. For teens, middle school dropouts or immigrants, the hourly wage is often lower than this. These individuals find work in small shops. Employers will decide that they don’t have the resources to pay them enough and will reduce their productivity. American farmers are also under increasing pressure to find jobs due to declining incomes and loans. Major companies will be reducing the number and laying off employees at this time. The data shows that the US had 102000 jobs in June, which is nearly 40000 more than the 140000 expected. American businesses also cut 35% more jobs during the first half of 2018. The House of Representatives called for $15 minimum wage increases, which would lift more than a million people from poverty. However, the CBO warned that increasing the minimum wage could result in one to three million people losing their jobs. Data may rise if the minimum wages are increased.
Ricky and the other officials often consult another study that was done by Princeton University economists David Card or Alan B. Krueger. It shows that the minimum wage did not affect employment in New Jersey and Pennsylvania. The decrease in employment in these two states must therefore be attributed to something other than the adjustment of minimum wage.
These studies are flawed, as some people believe. I am in agreement with them. Professor Donald R. Deere of Texas A & M University as well as Professor finis R. Welch of Texas A & M University along with Professor Kevin Murphy of University of Chicago are some of these experts. In their January meeting of American economic society, the researchers pointed out that the studies had made grave mistakes. New Jersey’s youth employment has declined significantly more than Pennsylvania, in part because of the increase in federal minimum wages in 1990 and 1991. New Jersey raised the minimum wage in 1992. Since then, New Jersey’s unemployment rate has not been much lower than other states. New Jersey’s management believed that the state would raise its minimum wage again after the federal minimum was raised. This led directly to a decrease in job openings.
The law that increases the minimum wages aims to protect vulnerable people, but it is actually the most vulnerable people who are being harmed. It’s not possible to raise minimum wage by using the invisible hand market. It depends on government intervention, some people believe. Companies were asked not to lay off employees. As a result, they won’t be able to hire new employees at their head offices. The minimum wage affects the most young workers, as we have already mentioned. The government may ask companies to hire new workers. so companies must find new workers. What’s the outcome? Our enterprise’s production costs are rising and our competitiveness is decreasing. What other options are available? We can’t compete against China and India in trade protectionionism. Why can’t we lock them out of our country? What will the consequences be? Who will shoulder the cost of production? Consumer.
The minimum wage increase is intended to increase the wages of workers, but employers may reduce jobs and increase unemployment as the cost for employment rises. Also, a substantial increase in wages might shift the cost to produce a rise in living costs. I believe that increasing the minimum wage could make it more difficult.
