Wednesday, August 13, 2014

Get Paid Minimum Wage: Stay At Minimum Wage

One of the downsides of raising the minimum wage is stagnation.  In other words, if you dramatically raise it, employers will be less likely to give their workers raises in any succeeding years.  Therefore, as each year passes without an employee getting an increase, that employee will see their earnings decline in real terms when measured against inflation.

To prove this point, we need only look at the number of minimum wage workers that existed before  they started to increase it in late-July of 2007.  In that year, there were only 267,000 workers earning a minimum wage.  In 2010, after raising it by a total of 40% in three successive years (2007, 2008, and 2009), the number of minimum wage workers rose to 1.8 million, and this wasn't because more jobs were being created.  Actually, 2010 saw the height of post recession unemployment at nearly 10%.  So, instead, the increase in the number of minimum wage earners was a direct result of those workers not getting increases.  Today, the latest 2013 data shows that there are still 1.5 million minimum wage workers; suggesting that only about 300,000 of those 2010 workers (about 16%) were able to successfully increase their incomes.

The conclusion.  Let's stop increasing the minimum wage by leaps and bounds every few years.  It is much better to index it to inflation on an annual basis than to keep using it as an election year campaign tool such as this year's current push by Obama and the Democrats to raise it another 40+% to $10.10 an hour.  That way, workers won't become discouraged with not getting regular increases in their salaries.  This fact is clearly evidenced by all the picketing that has taken place this year against fast food chains like McDonald's and retailers like Wal-Mart.


Characteristics of a Minimum Wage Worker:

After Years of Waiting, Millions of Workers Are About to Get a Raise:

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