Increasing the minimum wage is a big debate in politics right now. 13 states are set to have their minimum wage increase in 2016, including Michigan and California. In addition, there are 15 states that index their minimum wage to increase as the cost of living increases. Many are advocating to raise the federal minimum wage to $15.
A number of studies have found that these increases do not necessarily benefit the target: the poor. However, the article cited below argues that higher wages could lead to increased productivity. "Some British companies that voluntarily shifted to a higher living wage found that staff absenteeism and turnover rates reduced, and productivity improved."
Is this because a better-paid staff is more motivated? Or are employers forced to become more efficient to absorb the cost of higher wages? Does the distinction matter? Do you think the proposed increase of the minimum wage in the United States would increase productivity?
http://www.economist.com/blogs/buttonwood/2016/04/minimum-wages
It is sad when hearing that families are living off of minimum wage, which is nearly impossible. This families are in a terrible situation, and I think in that sense minimum wage should be increased.
ReplyDeleteI think getting paid more will make workers more productive for a short period of time, however it won't last forever. In order to increase productivity, the workers need to feel like they are appreciated and that their work is contributing in someway to the value of the company.
I'm just wondering if there will be inflation due to the increase in minimum wages. Also, $15 per hour is not minimum wage now and some people are making this amount. Will jobs that currently make barely over minimum wage now see an increase in their wages, or will those jobs be considered minimum wage jobs as well?
I think one major issue that is not brought up enough is that if the federal minimum would have adjusted over time, we would not be in this situation. "If our standard for minimum wages had kept pace with overall income growth in the American economy, it would now be $21.16 per hour"(http://inequality.org/minimum-wage/#sthash.h3W10V7r.dpuf). A lot of people seem to oppose the increased minimum wage for reasons other than economic ones, which is short sighted. It doesn't matter what people "think" certain jobs should pay. The reality is that there is a large portion of working Americans who cannot afford the basic necessities of life.
ReplyDeleteI think another point which is often left out of this debate is regional variance in cost of living. A $15 minimum wage makes much more sense in New York city than the rest of the state. Or in the case of California it makes more sense for Los Angeles than say Fresno. The studies are typically conducted in places more like Los Angeles so we really have no idea what's going to happen in the cities with lower costs of living.
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ReplyDeleteIn the short term, increasing the minimum wage would be a source of motivation to work more and increase productivity, but inflation will be adjusted to the increase of minimum wage. In the long term, that means that people will be used to minimum wage, and it will not be a source of increasing the productivity. Cause and effect are reversed. Higher productivity should increase the minimum wage, not other way around.
ReplyDeleteMany people have this unrealistic scare over minimum wage in that they believe an increase would lower unemployment, however, among all the research that has been compiled over the last half century, it has shown that minimum wage increases do NOT affect unemployment levels. I agree that a raise in wages will lead to inflation, but overall, it's effect won't be as drastic as many think. We're long overdue for a raise in minimum wage and it's time to act.
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