Thursday, July 9, 2009

Minimum Wage Set to Increase

Some of you may have noticed that the minimum wage is being set to increase. Why? To help those on lower incomes and to combat increased cost of living. I wholeheartedly agree that this needs to be done in order to account for inflation, but what does it mean for you as an individual?

During these tough and trying economic times with more and more people being laid off unexpectedly, an increase in that particular statistic does not bode well. Some have argued that an increase in minimum wage equals an increase in unemployment. This may be true if companies are forced to lay off employees due to restricted budgets. However, I believe this would only affect the smallest and the most struggling businesses.

A Princeton study conducted in 1990has revealed that an increased in minimum wage simply resulted in more people falling into the minimum wage earning bracket. It also revealed that those who earned above the minimum wage typically received a pay increase as well. This study also lent the suggestion that an increase in minimum wage led to a decrease in teenage employment. However, several other studies have discovered that this is not necessarily true, but that teenagers could expect to lose hours. Whether or not the increase in pay makes up for lost hours is unsure.

Another study has declared that "It appears that minimum-wage increases are not job killers — they are job-vacancy killers," "due to the fact that a higher minimum wage attracts more workers and reduces a firm 's vacancy rate; [and] in addition, decreased turnover increases productivity."

Its looks as though an increase in minimum wage will help in the long run during this worldwide recession. Although there is no way to tell when the recession will end or even if we are starting to recover, an increase in consumer's earnings is always helpful. The more money that the average consumer makes, more money is put into the economy and its more likely the economy will set itself to recover. Albeit the debate still rages on over whether minimum wage increases should be more or less than what they are, there can be no doubt that they these increases are completely necessary to account for the inflation that the world has seen over the past year or two. I would look at the increase, therefore, as a sign that this recession is finally puttering out. Even if the end is still a year or two away, we are much closer to economic stability that we were a year ago.

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