As I am sure many people have heard, there are several states (Arkansas, California, Delaware, Maine, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Rhode Island and West Virginia) that have raised their minimum wage as of January 1. Here in California, the minimum wage is now $7.50 per hour, which works out to $14,400 per year based on 40 hours weeks and 52 weeks a year of working. I have often wondered what effect raising the minimum wage nationwide would be, so I went looking for an answer. And while it seems there is not one definitive answer out there, there are a few things I found.
To find some answers to my questions, I just read an article over at MSNBC.com that discusses how this wage increase could affect businesses. Let’s take a look at what they say.
If Congress does raise the minimum wage, for example, it may also provide some tax relief to small businesses hit hardest by the law. In any case, the minimum wage law probably won’t apply to all workers: The current law, for example, exempts many businesses with less than $500,000 a year in revenue. There’s also something called a “youth sub-minimum wage” of $4.25 an hour for newly hired employees under age 20 during their first three months of work. Estimates are hard to come by, but according to federal statistics cited by Reuters, some half a million people currently work for the minimum wage. That’s about one-third of 1 percent of the work force.
That certainly can help, giving some tax relief to smaller companies. I think that could take some of the burden off the Mom and Pop stores or businesses with lower revenues. And since this article was written before the November elections, I can see that their last sentence definitely came true:
In any case, it looks like the increase is going to be enacted. One big reason is that, since the minimum wage was last raised in 1997, Congress has seen fit to raise its own wages eight times, or 24 percent, to $165,000 a year. (That works out to nearly $80 an hour for a 40-hour week.) With many American families struggling to make ends meet, members of Congress who vote against the increase may see a negative impact on their own employment.
I think what bothers me the most about the minimum wage is that there is such a HUGE discrepancy between different level workers. I understand a CEO should get way more money than a minimum wage worker; that’s not the issue really. Its the percentage more that they get paid that I have a problem with. Sure, keep the minimum wage low if you need to for economic reasons, but then do not go handing out $210,000,000 severance packages to an employee that you FIRED for doing a bad job (Ahem… Home Depot). I know this is America, free market, capitalism, etc etc…but there has to be some degree of sanity. Believe me, if I was CEO of a major corporation, I would expect to be paid handsomely for it. But I don’t think I need to make millions upon millions a year if some of my employees are making minimum wage; and then have my company complain they cannot pay more than the minimum as it would cost them too much.
I don’t know…I think increasing the minimum wage is a good thing and I think it will help the families that need it the most. The federal wage hasn’t been increased in what…10 years? I think it’s about time we help some people catch up to 2007. Sure, I might have to pay $1 more for a steak at a restaurant or $2 more for a this or that somewhere else, but I wouldn’t mind at all; I think it’s well past time to raise it up nationwide. I don’t think it would cost jobs, I just think things might cost a few pennies more per item. I think we are ready for this.