Fireworks were lit once the announcement surfaced the internet that President Obama stated, “Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty. ” (Obama) He was looking to raise minimum wage during his State of the Union address. The average middle class person would be elated that minimum wage was going to rise. The amount of increase would depend on your location.
I was one of those people would were excited that minimum wage was going up but then I thought to myself, “If minimum wage for my job with Gap Inc was going to raise to ten dollars and I am currently making that amount as a supervisor then I am back at the bottom of the pyramid. ” As much as raising minimum wage sounds like an excellent gesture it is not a good thing. The reason why minimum wage is not a good idea is because fewer jobs will be available, costs of living will be affected, and ultimately the value of the dollar will plummet.
There would be fewer jobs available because when companies hire people it is considered an expense to them. Continuing on the example I used prior with Gap Inc, I am a supervisor making ten dollars an hour in comparison to a sales associate who is making seven dollars and fifty cents. If minimum wage were to rise, Gap Inc has already stated they will not be issuing any raises outside of those who are making already making minimum wage or higher. Therefore I will continue to keep my pay along with the workload I will have.
Is that fair? The answer is no. No one will win, just like in my case; since I am a supervisor I will be the second person in line besides managers to receive guaranteed hours. And that is how it will be with every company. The rise of minimum wage will only force companies to be stricter when it comes to allocating hours to distribute. With time this will only lead to less jobs becoming available because jobs solely cannot afford to hire new people because minimum wage is high.
(Stoll) If job employers are not able to hire people because of minimum wage they will now look overseas more than they ever have. Not only will they look overseas for the production of their goods but job employers now have the opportunity to look for another workforce. For example companies like, IBM, Motorola Solutions, and even well known company Hewlett Packer, will now do majority of their business overseas because it is too expensive to produce any goods and have a workforce in the United States.
Since those companies are moving their companies offshore it resulted in having to lay off their employees therefore, minimum wage hiring will only add to unemployment. (McCormack) Minimum wage rising will have an effect on the cost of living. Items that were once everyday purchases will have higher price points. Businesses will see that minimum wage is raising and businesses seeing that will give them the idea to raise their prices. We already see that happening now. The price of food is already increasing.
For example, in the fast food industry is slowly pulling away from the “Dollar Menu” They now are having those same items that were once on the “Dollar Menu” for fifty cents more and now considering this previous glorified menu to now call it a “Value Menu”. Companies such as McDonalds would have to raise their prices because, “The remaining half of the adjustment could come through small productivity gains or a slightly more equal distribution of companies’ total revenues. ” (Kim) Not only will the price on food increase but when it comes to the housing market it will sky rocket too.
One would assume the reason why it will sky rocket is because realtors will want to take advantage of people since minimum wage is rising so can their prices. That is incorrect though. If minimum wage were increase then so would the housing market. Since minimum wage would have to be set for ten dollars for the entire United States it would result in an offset. Why? Because the cost of living in states such as California and Texas are two completely different styles of living when it comes to cost.
(Stoll) Here is an example: studies show that more than half the people who are making minimum wage are teenagers and young adults between the ages 16-23. If those teenagers and young adults are making $7. 25 an hour and are working fulltime that means they are making approximately $15,080 a year. (Stieglitz) President Obama’s motive to raise minimum wage was to help dig the United State out of poverty. But how much poverty is the average 16-23 in when they are most likely living with their parents in? The average teenager living with their parents is in the 85 percentile.
Therefore, while someone is finally able to maintain a house in Texas; people in California will continue to struggle because that housing market will continue to rise because of the people such as celebrities who live there. All because minimum wage was risen and half those on minimum wages are not even in the position to purchase a home. Raising minimum wage will only result to the continuation of the value of the dollar to decrease. People try to compare times of recessions in earlier years but they fail to do that with facts.
People are more so focusing on the numerical visual of money instead of the actual monetary value it has. Let’s compare value: $1. 60 in 1968 was considered minimum wage is now considered to be $10. 70 in 2014 dollars. (Stieglitz) In 2014, $1. 60 in 1968 could buy you and $10. 70 now in 2014 can barely get you milk, cheese, and bread. The value of the dollar will continue to plummet because it is continuously trying to be stretched into something it is not. Raising minimum wage will result in having to print more money that the United States does not have.
In order protect the value of our currency of course the government would have to stop outsourcing in different countries but more so they would have to start in our very own country. Instead of raising minimum wage to “satisfy” everyone’s needs. President John F. Kennedy said it best in his Inaugural Speech in 1961, “The rights of man come not from the generosity of the state but from the hand of God. ” (Kennedy) Therefore, the government should not dabble in raising minimum wage because people if people want to enter into a voluntary, consensual agreement that does not infringe or shuffle one anyone else’s rights.
Then why should the government assume they can stop them? Therefore if someone wants to work for seven dollars and fifty cents an hour, and someone wants to hire that person for that much, and no one is forcing either one of them to enter into this particular agreement, by what authority does government step in and stop them? Raising minimum wage will severely affect the number of jobs available, the costs of living rising, and will make the US Dollar drop in its value.