Minimum Wage
“An increase now will boost income for the poorest workers without the danger of creating- more unemployment.”, states the New York Times in September 1999. Is this statement about an increase in minimum wage really true? There are two sides to the debate about minimum wage that both hold valid points.
The minimum wage is a major issue in the world of economics and politics. Political figures often prey on the public’s general ignorance of economics and promise to increase the minimum wage. Economists, on the other hand, view the long-term effects and see the damage it can cause.
David Card and Alan Kruegur, two economists at Princeton University conducted a study in April 2007on New Jersey’s 20% minimum wage increase while Pennsylvania’s minimum wage remained the same. They measured the change in employment in the state’s fast-food restaurants between February and December that year. Card and Kruegur found that the number of jobs grew in restaurants where pay had to rise, compared with those already paying more than minimum was and compared with joints in neighboring Pennsylvania, where the did not change.
The study also found no difference between high- and low-wage states. Most people would be delighted to hear the above. They would receive more money and their standard of living would increase. But most 1people do not take into account the negative side effects of increasing the minimum wage. The survey taken by Card and Kruegur was done over the telephone.
Fellow economists charge that the questions were vague and errors crept into the numbers. Another study was done using the business’s payrolls found that New Jersey fared far worse be the obvious; more money for than Pennsylvania. Positive effects of the minimum wage can people. They would have more money to spend, the economy would boom and everyone would be happy.
Not so; in fact, this would only encourage inflation and increase prices. Money becomes lesser in value and producers would have no choice but to raise prices in order to make a profit. Another negative aspect of raising the minimum wage is unemployment rising.
The supply of workers would exceed the demand for workers. Employers would only be able to hire a lesser number of workers. It may also influence teenagers to leave y (11°01 for a high-paying job and make it more difficult for teenagers looking for work to find jobs.
Low-skilled workers would be left without jobs, seeing it only makes sense to hire the higher skill as to how hed worked versus the lower skilled worker. The minim wage debate is a touchy issue among many economists and political figures. While there are some positives aspects, the negative far out away the positives.
