I personally have only ever had two jobs in my life, and I was paid above minimum wage at both. Yet, when I hear that the minimum wage has gone up, I always automatically think that it’s a good thing because people can make more money per hour, duh. But as for the questions in class, is minimum wage efficient, is it fair economically and/or ethically? For these questions, I didn’t have any immediate answers or feelings one way or the other. To find out more information, I read an article titled “Minimum Wage and Fairness,” by Michael D. LaFaive.
Is minimum wage efficient? In class, the professor said most economists will tell you no, because the government is intervening on the employer/employee transaction. From reading “Minimum Wage and Fairness,” LaFaive argues that the market itself should determine the wage based on competition and the skills of a worker. For example, if a workers’ skills are only worth $6.00 to an employer, having to pay them $8.00 is basically just a bonus. Raising the minimum wage, LaFaive says will also exclude the poor and the young, because the demand for these two groups falls when their “price” goes up. BUT this idea conflicts with the argument we heard in class that unemployment has never gone up when the minimum wage went up. However, I myself have noticed it’s becoming harder and harder for my inexperienced friends to find work these days. This leads me to believe perhaps businesses are sticking with their skilled employees and paying them above minimum wage, regardless of their age, rather than taking a chance on someone else even if they will accept a lower wage. In my work places, even the young were paid above minimum wage for their skills, so I guess my employers decided their young workers in fact were worth the extra money.
In the midst of all this chaos and questions of fairness and efficiency, I can’t help but think of the many people I know who are paid “under the table.” I’m originally from Philadelphia and we have tons of mom and pop places and few huge corporations. LaFaive argued in his article, “ If a minimum wage is set by government at $5 an hour, but a worker's skills are valued by an employer at $3 an hour, the difference between the two is effectively an hourly bonus that many "mom and pop" shops simply can't afford.” This rings true in my life. I know many friends back home who are paid under the table and have been for quite some time, regardless of the state of the minimum wage.
Taking in all the different sides of the arguments as well as my own life experiences, I would have to say no, the minimum wage is not efficient, nor is it really fair. I think the business and their employees should be able to decide the wage and in a lot of the cases the businesses ARE deciding, no matter what the government says, so what’s the point really? I think the minimum wage really does encourage more people to resort to accepting an illegal wage and it hasn’t really helped out the people that do desperately need that extra dollar.
Bibliography
http://www.mackinac.org/article.aspx?ID=674
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I have to agree with you that minimum wage isn't efficient and not fair. You made a really good point where businesses should be able to decide the wage they want to pay there employers, but there would be some major issues involving that. Employees would be taken advantage of and also to the employer you might be worth less than what you think your work is. So there should be a minimum wage so avoid those types of arguments, but what should the minumum wage be? I believe minimum wage should be at a point where if an individual can work a 40 hour week and support them self then it is fair. They should be able to afford a car, rent, food, and etc. for a month even if it is at a bare minimum. They'd be living paycheck to paycheck, but now a days everyone is!
ReplyDeleteI think its fair. First off lets define a successful business. If you employ someone to the point where they can not effectively work another job yet you don't pay them enough to live on, your business is not a success shut it down. The people do it anyway so why regulate them arguement is not a good one. Thats like saying, "People break the law anyway. Why have police?"
ReplyDeleteYou make a good argument, and I'm not agreeing with illegal activities of possibly bad businesses. Somehow most of the smaller businesses I'm referring to justify not giving an employee minimum wage by saying the tips from customers will make up for the lack of a real wage, which sometimes results in employee actually making MORE per week than an person working full time for just minimum wage. But I understand that we basically have to have a minimum wage, I was just putting out another side of the argument, building off of what we learned in class.
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