Minimum wage hike could send employment spiraling
3 min readBy JAMES LLOYD
Like a moth to a flame, so goes President Barack Obama to another idealistic agenda. At his State of the Union address on Feb. 12, the president announced his intention to raise the minimum wage to $9 per hour. Is this really what the country should be focusing on, considering the current debt and unemployment issues that we face?
It may sound like a great idea, but with about eight percent of the approximately 175 million people in the labor force unemployed, as reported by the U.S. Bureau of Labor Statistics, maybe we should be focusing some money in creating new jobs instead of mandated health care or minimum wage increases.
Furthermore, with many companies on tight budgets in this economy, where would the extra $1.75 per hour for each employee come from? Are small businesses going to magically make new money from nowhere? Most likely, businesses will cut back their labor force, increase prices of their goods and services or maybe both. So while costs increase, unemployment increases, and the government prints more funny money to make up the difference, sending the U.S. economy spiraling deeper into dept, how will this improve the economic situation of so many Americans?
Many of us have heard of the hour cuts companies might employ in order to avoid paying for health care for their hourly employees. This is the result of our president’s untimely health care plan that, regardless of whether or not you agree with it, is being enacted at a time when it seems to be doing more harm than good.
To an employer, forcing companies to provide health care for their full time employees is not really any different than forcing an increase in minimum wage. It still causes some companies to consider layoffs, reduction in hiring or, in this case, reduction of hours simply to cover the increased cost of retaining employees. Thus, it leaves companies with the issue of trying to do their jobs understaffed. Now these hourly employees are making less money, doing more work and still don’t have health care. So again I ask, how does this help?
Some may think that the increased pay will compensate for the decreased hours. Well, I’m a math major, so let’s check. Suppose an employee works a regular week for minimum wage. That would be $7.25 per hour for 40 hours a week. Losing 11 hours a week drops their total pay by $79.75. Now, let’s consider in the increased $1.75 per hour in a 29 hour workweek. That’s $50.75 a week. So, they are “only” loosing $29 a week or $1,392 a year. Who would miss that? My guess is the person working minimum wage would miss it.
While I’m not condoning the actions of companies or state agencies that use these tactics to circumvent federal policies, as someone who assists in the operation of a small business, I do understand where they’re coming from. Maybe if the world were ideal, then ideals would help and not hurt. Maybe if politicians and heads of corporations did not take excessive paychecks, while the people working themselves to the bone on the front lines barely make ends meet, these idealist agendas would work. Maybe if this country was in a better state, then some of these ideals could be a strengthening force instead of an exacerbating wound.
As an elected official, it is the President’s duty to sometimes put aside his idealist plans and focus on the problems that face us. If the president wants to put in place some idealistic dream that doesn’t hurt the people who elected him, then how about limiting all elected officials’ pay to the average of their constituents? The people get a better class of politician, the country gets to decrease its debt and maybe we inspire some people to invest in our workforce. Who knows, but how can it hurt?
