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Ups and downs of minimum pay
Published Friday, July 3, 2009
In just a couple of weeks, workers’ pockets will feel a bit heavier, while employers will likely see less revenue coming in.
The federal minimum wage is set to rise from $6.55 per hour to $7.25 per hour on July 24, the third straight year the minimum wage has risen.
Minimum wage rose from $5.15 per hour in 2006 to $5.85 in 2007 and then from $5.85 to $6.55 in 2008.
Those who currently make minimum wage are looking forward to the increase.
“I’m ready for it to go up,” said Sam Sullivan, a cashier at Ingram’s Curb Market. “I’m getting ready to move out of my house, so any kind of extra money would be really helpful.”
While the increase may be helpful for those making minimum wage, some believe it will not be beneficial for everyone.
“The rise in the minimum wage will only exacerbate the problem of unemployment during this recession,” said Troy University economist Judson Edwards. “Locally, the unemployment rate is eight percent, which is over double the 3.5 percent figure from a year ago. So accordingly, if you have excess supply of any good or service, such as labor, in order to reduce supply, you lower the price to stimulate demand from consumers.”
Edwards said the new increase would not encourage employers to hire new employees.
“Consumers of labor are employers,” Edwards said. “So, the minimum wage law does not allow for labor prices to fall to the point where employers are enticed to hire new employees. This means higher unemployment.”
Edwards said he understood employees’ excitement over getting paid more, but warned of the consequences of such an increase.
“From an employee’s perspective, a pay raise is a positive because it’s more disposable income,” Edwards said.
“But, covering the cost of the increase may cause employers to cut staff. This is especially true during this complex recession of tight credit market and diminishing consumer demand.”
Edwards also said the number of minimum wage workers that are employed will likely drop.
“The inflexibility of minimum wage laws is particularly detrimental in this economic climate,” Edwards said.
“The wise public policy choice would be to delay enforcement of the new increase until the economic recovery is clearly underway, which at this point could be one to two years out.”
However, some local employers said they don’t expect the increase to affect their hiring.
Troy Associate Vice Chancellor of Financial Aid Carol Ballard works with the university’s workship program, which helps to place Troy students in on-campus jobs.
“It shouldn’t affect our hiring,” Ballard said.
“In the budgeting process, we were told all salaries would be adjusted based on the increase. So, our budgets have adjusted, and we shouldn’t lose any positions.”
The university also has a similar work-study program that appears to be safe.
“We also have work-study programs and that will also be adjusted for the increase, so everything should be adjusted,” Ballard said.
“We don’t foresee any changes for our students.”
Other employers, such as the City of Troy, are unsure if the increase will affect their hiring.
“Each department has their own budget, so it’s up to the budget for each department as to whether or not minimum wage affects hiring,” said Human Resources Director Brenda Sims.
Troy City Clerk Alton Starling said the budgets would be affected by the increase.
“When you have increased costs, you always have to budget accordingly, so it does have an impact,” Starling said.
However, Starling also said the increase was something the city has dealt with before.
“We do hire summer help for Parks and Recreation and different things, so it might affect us a little bit,” Starling said.
“Of course, last summer, when the minimum wage went up, we had a certain number of spots to fill, and we filled them.”
However, it isn’t just employers and employees that will be affected by the increase in minimum wage.
According to Edwards, consumers will likely feel the repercussions of the increase.
“Generally, these costs are passed on to the consumer unless they are absorbed by the company in one of the factors of production or willingness to reduce profit, which is unlikely,” Edwards said. “The minimum wage also plays an inflationary role on prices, especially in lower-order goods and services. For example, the cost of a Burger King or McDonald’s burger will likely increase because of this action.”
While Edwards said the increase would hurt many people, Sullivan was still excited about a higher paycheck.
“People need to realize that any time you can get more money, it helps out,” Sullivan said.
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Comments
Posted by turtle (anonymous) on July 3, 2009 at 11:39 p.m. (Suggest removal)
Don't get excited about an increase in minimum wage because with that increase comes an increase in necessary items for living like groceries, cleaning supplies, and such. So even though you make a little bit more money you aren't really getting anything when the cost of living rises as well. Also why do people view minimum wage increases as a "raise". I'm sorry but in my opinion it isn't, you get the same pay regardless of whether you are doing a good job or not. A raise is a voluntary increase in pay by an employer to reward an employee for doing a good job. Employers shouldn't view minimum wage increases as raises and neither should employees because it give no one an incentive to do the best job they can. That's just my opinion and I know the saying about that!
Posted by uglydog65 (anonymous) on July 4, 2009 at 5:17 a.m. (Suggest removal)
2 years ago a can of vegetables cost about 50 cents, now same can cost about 80 cents, more money in one pocket, more out of another pocket. Anyone want to bet that it want to bet that it doesn't go to 1 dollar soon.
The ones hurt the most are the one's that worked their whole life and put away some savings for retirement. Their lifetime savings will now only buy half of what they had saved for.
Posted by bamaslick (anonymous) on July 4, 2009 at 8:09 a.m. (Suggest removal)
Why anytime minimum wage raises that consumer product must go up? It doesn't have to be like that. To justify their reasoning, they'll probably use the recession. But to help break out a recession...if you knew people had more disposable income, wouldn't it behoove of you to keep your product prices the same and stop trying to rip off the poor - middle class Americans. Those are the majority of people that are doing the consuming. Its always the poor man to carry America's burdens! I love Capitalism!
Posted by elvis2 (anonymous) on July 4, 2009 at 9:43 a.m. (Suggest removal)
bamaslick , I tend to agree with your opinion . With a few more dollars to spend on goods, I don't see why prices should go up so much . In the long run the merchant will be getting some if not all of his money back because there will be more money to be spent .I'm quite aware when I shop of prices and there are quite a few items that do not warrant a price increase but the price is raised simply under the excuse that everything is going up.
Posted by robjohn (anonymous) on July 4, 2009 at 12:21 p.m. (Suggest removal)
Elvis and Bama,
Prices tend to go up, because the cost of providing a service or making a product went up, its simple math.
http://libertyisprecious.blogspot.com
Posted by elvis2 (anonymous) on July 4, 2009 at 1:59 p.m. (Suggest removal)
robjohn , not always .
Posted by OldSchoolPike3Worker (anonymous) on July 4, 2009 at 2:08 p.m. (Suggest removal)
When you broke, and your making minimum wage, your always going to be broke. If a pay raise of 28(40 hr week with $.70 per hour raise) bucks per week would change anyone's life at all, then they wouldn't need so many briefcases on Deal Or No Deal. The best way to help someone making minimum wage is to help them become more skilled so they can get a better paying job or, dare I say, start their own business. These across the board increases are just legislating more beer money. Minimum wage employees need incentive to make more money, they shouldn't be told that they are making enough. I have worked for minimum wage more than once in my life and I always told myself that it was only temporary until I could do something better. Financial slavery is what our leaders really want. The more people that depend on others for their basic needs, the less freedom anyone has.
Posted by bamaslick (anonymous) on July 4, 2009 at 2:09 p.m. (Suggest removal)
Its not simple math...its math that you tend to believe because you can find no other way to explain it.
The people who have minimum wage jobs are not the people responsible for can goods. They are not in the slaughter house profession. Min. wage jobs are mostly fast food and janitorial and clothing shops. They do affect the making of dresses, the production of meats, or the everyday needs or wants of every person.
This is propaganda of business owners to justify an unnecessary mean. They do that just because they are mad they are being told to pay out more money. Prices are going to go up with are without a higher min. wage.
"Prices tend to go up, because the cost of providing a service or making a product went up"
That saying if anything (not just wages) affects the cost of providing services that the price should go up and down with the changing market. But prices never seem to go back down!
Posted by OldSchoolPike3Worker (anonymous) on July 4, 2009 at 2:26 p.m. (Suggest removal)
Read this and then you will see what I mean.
http://www.marxists.org/archive/marx/wor...
Folks, you can call it what ever you want but whatever title you give to what is happening to our country doesn't matter because the communist will stop at nothing until there is no private property. When the Soviets fell, communism needed a new host, I think they have found it in one of our political parties right here in America. By the way, happy Independence Day!
Posted by bamaslick (anonymous) on July 4, 2009 at 3:12 p.m. (Suggest removal)
I hope Communism does not come here...Communism is built on a fact that is wrong...that people are naturally good which is a totally untrue. Communism wood work everywhere it has been if people were naturally nice but that just isn't the case.
I understand that a higher min. wage doesn't really do much to people income but if that is all you can do then that is all you can do, for now. You will always have different classes of people in every society but what keeps it from turning into an uprising of people that feel that they are unjustly treated is fair play.
Do not play with people minds. If people could survive off of min. wage with a little to spare to have their needs and a few of their wants satisfied, complaining of unfair treatment would surely be at a minimum.
Those people would eventually try and better themselves and not stay at the minimum wage. Someone else would take their place and eventually themselves move on. It would be a constant cycle without all the hoopla.
People do not need to be lied to...Don't piss down there backs and tell them its raining.
"The more people that depend on others for their basic needs, the less freedom anyone has"
That is Communism...If man was inherently good, what a utopia the world would be. You could depend on the next man as he depends upon you!
Posted by BeachGirl (anonymous) on July 5, 2009 at 11:18 a.m. (Suggest removal)
i dont think its fair that the minimum wage keeps going up unless the rest of ours does too. I WENT to college to make it where i would make more money, i graduated. If they keep letting everyone elses wages go up what about ours? its not fair that everyone else is eventually going to catch up to the wage that i went to college for. Now more people are going to say well i dont have to go to college b/c i can make almsot as much working at mcdonalds. im sorry but wheres my extra dollar an hour?? it just irritates me to no end...
Posted by TFan (anonymous) on July 5, 2009 at 11:50 a.m. (Suggest removal)
..and one wonders why American manufacturers export jobs to lower cost operating environs or adapt by embracing higher tech/lower labor processes. On top of higher wages, add higher payroll taxes, possible health care mandates etc etc, no wonder Mr American Mfr goes "overseas" with his operations. Can't have it both ways, higher costs AND lower prices.
Just take a look at supply sources on hundreds of products at Wal Mart. Not so 15 years ago. But, on the other hand, these "lower costs' are passed on the American consumers in lower net prices at the register.
Wish Uncle Sam would just let the "free market" regulate itself through unrestricted supply/demand forces.
The former blogger "hit the nail on the head", a good education is the best way UP!
Posted by bamaslick (anonymous) on July 5, 2009 at 3:10 p.m. (Suggest removal)
Sometimes we can be so silly. If someone is a college grad and will accept making minimum wage in the field of major, then secondary education was a total bust for them.
A college degree doesn't necessarily equal the highest paying job...it would help! I thought people to college to enrich their lives. So everyone that doesn't go to college should have s%$& jobs? Everyone is not meant for college...that doesn't mean that they are not as smart as the person who did. It just means that person who did, just has a better variance of knowledge.
American manufactures export jobs because of greed. Nothing else. If Mr. American MFR weren't trying to to be greedy and conniving, there wouldn't be a need for mandates!
"free market", what a joke! Its not free! Whomever controls the supply can demand what they wish.
Posted by BeachGirl (anonymous) on July 5, 2009 at 3:17 p.m. (Suggest removal)
yes college is to enrich your life AND allow you to have a more financially sound life. People who go to college SHOULD make more money. No, not everyone is meant for college and if they are content to make min wage then more power to them, but is it fair to continually up the min wage when they are doing nothing for it? Maybe im biased because i spent 4 yrs in a college classroom hoping for better and now it seems theyre just going to make it super easy for anyone to make 'better' money than me by simply working at a fast food place. and i worked fast food im not saying im better than them but i should make more money hands down.
Posted by bamaslick (anonymous) on July 5, 2009 at 4:05 p.m. (Suggest removal)
People that go to college do make more money than people who do not, most of the time. Now if someone picks a job that made at or only a little more than a person at min. wage, they need to talk with their Career Counselor.
Why is it fair to continually to go up on the price of cars, gas, groceries, taxes when there is no reason for it, while still keeping the same wage?
Its is not a written rule that you should make more money for going to college and earning a degree but it is traditionally the case. If you do have a degree than yes you should make more than a fast food worker; I cannot see how you do not!
We live in a capitalistic society where in most cases, but not all, that education breeds better opportunity than who you know, or just plain luck!
Posted by Blue_Sky (anonymous) on July 5, 2009 at 6:17 p.m. (Suggest removal)
Are the Russians out of Georgia yet?
Posted by TroyAlumna (anonymous) on July 6, 2009 at 10:20 a.m. (Suggest removal)
I did graduate from college a few years ago, and I do make more than the minimum wage. However, it seems that every job ad I see requires 1-5 years experience. What about those that are just coming out of college and do not have that experience? So, that goes to show you that it's not ALL about whether or not you have a higher education. (Although A LOT of ads out there require that as well) But I do agree that as the cost of living goes up, so should the minimum wage.
Posted by troy01 (anonymous) on July 6, 2009 at 7:26 p.m. (Suggest removal)
In resoponse to bamaslick
The people making minimum wage do effect can good costs. The grocery clerk, stock boy, farm hands..ect.
Minimum wage goes up services and goods costs will go up. It is not as simple "math" as that, however, in no way does minimum wage not effect the costs of these goods and services.
Posted by bamaslick (anonymous) on July 6, 2009 at 8:22 p.m. (Suggest removal)
Okay, minimum wage may affect can good cost by a small percentage. Most grocery store items that are sold to small businesses like IGA and etc...are from a large firm like Proctor & Gamble or General Mills; by min. wage going up, they should not have to go up on the prices of the products the small business buys. I am probably wrong in my assumptions but that is just the way I feel.
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