Across the United States, tens of thousands of low income workers have lobbied to raise the minimum wage to $15/hr. This is one of the largest wage protest in American history, and it appears to be working. 🙂 Seattle, WA is the first to begin a multi-year transition to $15/hr minimum wage starting this month. The people of San Francisco, CA have voted to raise its minimum wage to $15 by 2018.
In the state of Connecticut the government is trying something a little different to implement a higher wage standard. The current minimum wage there is $9.15/hr, but a new proposed bill seeks to fine large companies that underpay their employees. If the bill passes it would fine businesses $1/hr per employee who doesn’t earn the $15 minimum.
Some people believe this legislation would reduce income inequality and make low-wage workers better off. 🙂 But others retort that this is just a tax grab for the government, dressed up to look like a bill that would help the lower class. The reality is that if a company is currently paying $10/hr to a worker, then simply coughing up an extra $1 to the government is more economical for itself than raising the wage of that worker by $5/hr. In fact, that worker may actually see his/her real wage and purchasing power reduced. The extra $1/hr is an expense for businesses making them more costly to run, which often trickles down to higher prices for consumers. It’s kind of ironic that a bill that’s designed to help the most vulnerable working class would actually make life harder for them. Employees who are already making over $15/hr would not be affected. So this new bill would only benefit workers who earn between $14/hr to $15/hr.
I believe there is merit in having some kind of living wage standard within a society. But it has to be implemented in the right way. For example, Norway has relatively low wealth inequality, and non-skilled labor usually starts at the hourly equivalent of $20 USD. Norwegians are also famous for being some of the happiest people in the world. 😀
I don’t know if $15/hr is the right minimum wage for the U.S. to adopt. Canada’s minimum hourly pay is between $10 to $11, depending on the province, and I think we have a pretty good system up here. Both proponents and opponents of higher minimum wage laws have made persuasive arguments for their positions, but the simple truth is that we don’t know what the real effects are yet of a $15/hr minimum wage. I’m sure we’ll have more information over time when new studies and reports about this come out for cities like Seattle and San Francisco. 🙂
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Random Useless Fact:
Australia is shaped like animal heads
High wage means high tax for government. Also, workers will loose some low income family benefits when they receive high income. And, cost of living also increase as people willing pay more as they have more money, this trigger the inflation.
So, the real winners will be government and the people with high debts 😀 .
FJ
As someone who has debt I like the sound of higher inflation. 🙂 But on the other hand I don’t like bigger governments lol. Good point about losing tax benefits when people make more money. It’s not only paying more taxes to the government, it’s also about receiving less in social assistance.
Labour has a natural supply and demand equilibrium much like anything else. The true minimum wage (when there is a legislated minimum wage) is zero because of job loss. A minimum wage encourages capital replacing labour.
Have you seen the new self-serve tills at Home Depot, Safeway, etc? I believe we will quickly see the same thing in other industries including food service (ex: a Tim Hortons with 5 to 10 order computers, and people behind the counter slinging coffee and donuts).
Liquid, Minimum wage laws create the same market distortions as rent control. Are you in favor of rent control? I am sure I could find a few “down-on-their-luck” farmers that could use a little break from their landlords. 😉
I don’t like rent control the same way I don’t like governments mandating a minimum wage. The market should decide that. I like the system in Finland where is no minimum required wage, but the society already puts in place a wage floor for just about every worker that’s higher than $11/hr. 🙂
As someone who is currently working for minimum wage for the first time in over 10 years, I don’t think raising it is he answer. Doing so just bumps up the prices of everything else and in X number of years people will be fighting for min wage to be $20/hr instead. I do wish companies did a better job of giving raises when they are earned. For example, my coworkers have been working there for over 2 years and they earn the same as the girl that started yesterday.
That’s too bad for your coworkers. They should have gotten a raise to at least keep up with the increased cost of living.
This is exactly what happened to my sister and to me. We were in separate companies, but stick around for so long, that we realized even though we were giving raises, but the people who starting make the same was we do.
I remember the minimum wage was $5.25. My friends were applying for McDonald’s job and getting a $0.10 raise was a big deal. Now, since the Great Recession, people who work for McD, and Walmart, TGT, HD, etc are making a career out of it. Therefore, it is more of a necessary to give them a living wage instead of relying on the government to give them supplements. It is shameful that companies like McD coaching their employees to get foodstamp and wellfare from the government in addition of their salary??!! It seems backward. You get a job to get out of poverty, to get out of government help, companies are playing games to maximize their profit …
The dynamic has changed for the whole job industry and prospect. I have no opinion on this, and no solution … but the problem we are facing is a big one.
Yes, different people have different opinions about labor laws. I recently saw a story where a company has decided to make the minimum pay $70,000 for all of it’s 100+ workers. This wouldn’t affect any employee already making over $70K, but would be a good salary bump for those making less. The potential long term affect might be that those who were making $40K or $50K would just get laid off or replaced with more productive candidates. Whenever rules are put in place to “help” the lower income group, unexpected consequences may occur that could actually hurt them instead.
Liquid,
We’ve had minimum wage for decades in Belgium. I believe any self-respecting society that wishes to minimise social inequality should adopt minimum wage measures. Of course, the wage level and the policies associated with it should be up for debate as they’re dependent on the location and circumstances.
Besides, it’s called minimum wage for a reason: it’s the bare minimum needed to survive in your country. If you as a society can’t make it so that everyone at least enjoys a human standard of living you’re doing something wrong.
Thank you for continuing to publish provoking posts, they won’t be popular among all of your readers!
Cheers,
NMW
I think it depends on location and circumstances too. There’s good and bad sides to higher and lower taxation. Overall studies show closing the income inequality gap benefits everyone as a whole so it’s everybody’s responsibility to insure our society’s future.
Ah, I remember the days when I made the minimum wage and was really happy to get paid for working. Raising the minimum wage would raise the poverty line, but people will always want more…
People have to learn how money affects them emotionally. If they don’t come to terms with money then they will never have enough no matter what the minimum wage is.
It is a good initiative, unfortunately it will only accelerate the inflation. On the other hand you could apply this sort of logic for any government initiative. If it will be introduced in selected cities it is interesting to see and observe. I am surprise how people survive in San Francisco on 20 dollars and hour before taxes.
Yes, when the government gives student loans to everyone to help people pay for higher education it only increases the cost of education and the schools and faculty benefit the most.
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