Raising Minimum Wage Negatively Affects Business Growth
How Raising Minimum Wage Negatively Effects Business Growth
Can raising minimum wage destroy a business?Minimum wage is pay covered for nonexempt employees. In Illinois, that rate is currently $8.25 per hour. There are both pros and cons within the minimum wage system, however, I believe the raising the minimum wage would do more harm than to to our economic system. Some negative effects include; revenue loss, a decrease in customers, loss of production, and decreasing stocks. Additionally, raising the minimum wage can drastically effect small business owners in negative ways.
A business can lose money by raising minimum wage. A small business with at least 20 workers at or close to the exact minimum wage will have its labor costs increase by $45,000 next year alone. A business will have to raise prices to pay their employees more. If a store had extremely high prices, would you go there to buy products? Most people avoid high prices so they go to another business, which causes the small business owners profits to fall. Businesses that raise minimum wage every year lose money with each increase.
By raising minimum wage, a business can lose production by the loss of their workers. Raising the minimum wage means, you then have to lay …show more content…
off workers to accommodate the pay increase of others. When a business begins to lay off workers, it causes their production rate to decrease in unwanted areas previously listed. A source on Alec.org stats that, "Increasing the minimum wage will hurt the exact people it's meant to help". Increasing minimum wage causes the loss of jobs so a business can pay remaining employees more. Loss of production will be massive if minimum wage keeps rising annually.
In addition, the rise of minimum wage causes jobs to disappear from those who want to work. In July 2009, Congress raised minimum wage by 10.6%. Within six months, almost 600,000 teen jobs disappeared in spite of a nearly 4% of economic growth. The only way to raise minimum in a huge business is to either move into a smaller building or let go of workers. The rise of minimum wage denies low-skilled workers the opportunity to get a job and receive “on the job training." Sense says, “either the business or a customer would have to pay more” for minimum wage to be raised. In total, a decrease in jobs would be devastating to a lot of people if minimum wage rises repeatedly.
Minimum wage also hurts teenagers that are looking for their first job. Businesses want employees that are already skilled and trained. Also, if the minimum wage keeps increasing, more people will be jobless struggling with lower income. Minimum wage can hurt you even your own children without you even knowing. Nothing positive comes from having a higher minimum wage. Labor costs are rising and poverty is increasing but no one really sees it. Many firms respond to minimum wage increases by reducing the number of low-skilled labor. For example, grocery stores may substitute away from cashiers and toward self-checkout systems or toward higher-skilled labor. If some low income, low-skilled workers lose their jobs or have their hours cut because of minimum wage increases, their incomes may fall, resulting in a rise in poverty among these households. People believe that making more money is better until they see the outcome. However, nothing is wrong with wanting to be financially comfortable, but you must learn how economics work.
Some people say minimum wage is good and that nothing happens when it is raised.
However, I believe positive aspects are minimal. For example, increasing the minimum wage does not reduce employment, and it does not run counter to dozens of credible studies by economists that show a negative (though modest) effect. There are also a few recent studies showing no effect at all, generating some doubt about exactly what will happen.
The risk of employment loss for several hundred thousand low-wage workers, in an already soft job market, should not be dismissed. The very large minimum wage increases now occurring in many states and localities will almost certainly drive some employers across their borders toward lower-wage
jurisdictions.
People are competing for jobs in our current economic environment. Both lower and middle class people who need jobs are colliding. What our capitalist system needs most is increased domestic consumption. Businesses are doing more than they can afford causing them to go bankrupt.
In conclusion, I believe that raising the minimum wage is putting money into pockets of those who are already wealthy. Jobs created by the increase in demand for goods and services would overwhelm any direct job loss that already exists. This is the same logic used to support lower tax rates — lower rates bring more economic activity, which leads to more government revenue.
Can raising minimum wage destroy a business?Minimum wage is pay covered for nonexempt employees. In Illinois, that rate is currently $8.25 per hour. There are both pros and cons within the minimum wage system, however, I believe the raising the minimum wage would do more harm than to to our economic system. Some negative effects include; revenue loss, a decrease in customers, loss of production, and decreasing stocks. Additionally, raising the minimum wage can drastically effect small business owners in negative ways.
A business can lose money by raising minimum wage. A small business with at least 20 workers at or close to the exact minimum wage will have its labor costs increase by $45,000 next year alone. A business will have to raise prices to pay their employees more. If a store had extremely high prices, would you go there to buy products? Most people avoid high prices so they go to another business, which causes the small business owners profits to fall. Businesses that raise minimum wage every year lose money with each increase.
By raising minimum wage, a business can lose production by the loss of their workers. Raising the minimum wage means, you then have to lay …show more content…
off workers to accommodate the pay increase of others. When a business begins to lay off workers, it causes their production rate to decrease in unwanted areas previously listed. A source on Alec.org stats that, "Increasing the minimum wage will hurt the exact people it's meant to help". Increasing minimum wage causes the loss of jobs so a business can pay remaining employees more. Loss of production will be massive if minimum wage keeps rising annually.
In addition, the rise of minimum wage causes jobs to disappear from those who want to work. In July 2009, Congress raised minimum wage by 10.6%. Within six months, almost 600,000 teen jobs disappeared in spite of a nearly 4% of economic growth. The only way to raise minimum in a huge business is to either move into a smaller building or let go of workers. The rise of minimum wage denies low-skilled workers the opportunity to get a job and receive “on the job training." Sense says, “either the business or a customer would have to pay more” for minimum wage to be raised. In total, a decrease in jobs would be devastating to a lot of people if minimum wage rises repeatedly.
Minimum wage also hurts teenagers that are looking for their first job. Businesses want employees that are already skilled and trained. Also, if the minimum wage keeps increasing, more people will be jobless struggling with lower income. Minimum wage can hurt you even your own children without you even knowing. Nothing positive comes from having a higher minimum wage. Labor costs are rising and poverty is increasing but no one really sees it. Many firms respond to minimum wage increases by reducing the number of low-skilled labor. For example, grocery stores may substitute away from cashiers and toward self-checkout systems or toward higher-skilled labor. If some low income, low-skilled workers lose their jobs or have their hours cut because of minimum wage increases, their incomes may fall, resulting in a rise in poverty among these households. People believe that making more money is better until they see the outcome. However, nothing is wrong with wanting to be financially comfortable, but you must learn how economics work.
Some people say minimum wage is good and that nothing happens when it is raised.
However, I believe positive aspects are minimal. For example, increasing the minimum wage does not reduce employment, and it does not run counter to dozens of credible studies by economists that show a negative (though modest) effect. There are also a few recent studies showing no effect at all, generating some doubt about exactly what will happen.
The risk of employment loss for several hundred thousand low-wage workers, in an already soft job market, should not be dismissed. The very large minimum wage increases now occurring in many states and localities will almost certainly drive some employers across their borders toward lower-wage
jurisdictions.
People are competing for jobs in our current economic environment. Both lower and middle class people who need jobs are colliding. What our capitalist system needs most is increased domestic consumption. Businesses are doing more than they can afford causing them to go bankrupt.
In conclusion, I believe that raising the minimum wage is putting money into pockets of those who are already wealthy. Jobs created by the increase in demand for goods and services would overwhelm any direct job loss that already exists. This is the same logic used to support lower tax rates — lower rates bring more economic activity, which leads to more government revenue.