Shadduck

Grant Shadduck

Instructor: Malcom Campbell

English 1104

May 1, 2017 Deleted: April

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Minimum Wage, Minimal Opportunity?

When people say, money is not the most important thing in life, I do not entirely agree.

You may ask why?, but let me explain myself. In no way am I saying that you need money to Deleted: paint a picture to help

be happy, however that is beside the point. Without money, many people struggle to support

themselves and their families. Things that many of us take for granted: Food, a car, even a place

to call home, others must make hard decisions about. But, what if we, as a nation could help

some find relief when it comes to financial stability? Would you say, Why not, lets do it?

That answer is what leads many Americans to support raising the federal minimum wage.

However, as with any argument, there is opposition. The question is, should the United States Deleted: an

raise the federal minimum wage, or will raising it further hurt our economy? Deleted: ? O

The impact of minimum wage is all around us. Many of us spent our teenage summers

working for minimum wage. Even if you have never had a minimum wage job, your daily life is

most likely supported by people who work for minimum wage. Where does your morning coffee

come from? How about the person working the register at your favorite restaurant? It is highly

likely that they all make minimum wage. But, so what? They seem to be doing alright, right?

Some may be doing alright, some may even be doing well; however, there are many Americans Deleted: ,
Deleted: hundreds of thousands of
struggling to make ends meet on minimum wage.
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Take Crystal Dupont for example: a Houston woman who even while working 30 to 40

hours a week still only brings home around $15,000 annually. With no health insurance, Crystal

has not been to a doctor in years. After graduating high school in 2006, Dupont moved out of her

family home and got a job. Like many others, she soon concluded that it is almost impossible to

live on her own. The now 25-year-old, is living at home, on food stamps, her mothers disability

benefits, and whatever she can bring home from her full-time job (Linn). Many ask, how can this Deleted: , By the Grace of God

happen? How can a woman who works almost 40 hours a week barely get by? I too, agree that

this should not be the case. Yet, the issue is much more complex than just increasing the federal

minimum wage. The economy could be affected by the raising of the minimum wage. One of

best ways to judge the strength of an economy is by looking at unemployment rates. Raising

minimum wage could lead to increased unemployment rates. The danger for increased

unemployment is in part due to the introduction of automation, as well as the closer of many

businesses. For these reasons and more, there are Americans who are more hesitant when it

comes to increasing minimum wage. Deleted:

Those in support of an increase in the federal minimum wage have numerous reasons to

suggest that an increase is needed According to Andrew Soergel, author of Pay Wars which ran Deleted: . The last time

in US News and World Report, the federal minimum wage was raised was back in 2009

(Soergel). A lot has happened since 2009. The economy has bounced back from the Great Deleted: , Pay Wars

Recession and inflation has continued to affect the buying power of $7.25. Something as simple

as a gallon of milk has drastically increased over the past few years. In 2009 a gallon of milk cost

$3.11. Compare this to 2014, when the same product would cost on average $3.82 (U.S.

average price of milk). Although this may not seem like a big deal, it is not just milk. The

buying power of $7.25 is not the same as it was when it was implemented in 2009. Many
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Americans believe that federal minimum wage should be increased to adjust for inflation.

Congressional Democrats have proposed a bill to raise the federal minimum wage to $10.10 an Deleted: d

hour, helping fight inflation. The bill was supported by former President Obama. More recently,

democrats proposed a bill to raise minimum wage to $12 an hour by 2020 (Kasperkevic). Deleted: , Congress to Propose Bill).

The Fight for $15.

Many, like former President Obama and presidential candidate Bernie Sanders are Deleted: however,

pushing for an increase even above $12 an hour. The national movement aptly named the Fight Deleted:
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for $15 believes that the minimum wage should be $15 an hour. Recently. some states like Deleted:
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California have introduced bills to gradually increase minimum wage until it reaches $15 an Deleted: ,
Deleted: approved
hour. The bill currently has set 2022 as the deadline by which they hope to have minimum wage
Deleted: proposed
Deleted: has the final deadline as 2022
at $15 an hour. (Gibson).
Deleted: , Will Raising the Minimum Wage

Similarly, many argue that the employment rate is not threatened by a minimum wage

increase. Supporting this claim is a 1995 research study that studied more than 400 restaurants in

New Jersey and Pennsylvania. The study compared the employment rates between the two states

after New Jersey increased minimum wage from $4.25 to $5.05. They concluded that there is no

indication that the rise in the minimum wage reduced employment." (Gibson). Deleted: , Will Raising the Minimum Wage

However, there is a strong counterargument: the study is focused on a change of around

17%. However, to reach the $15 an hour benchmark, minimum wage would be increasing by

almost 70%. Even if you spread that increase over several years, a 70% increase is still much

larger than anything studied before. Although there is data that a minimal increase, like that of

17% does not hurt employment rates, there is a huge difference between 17% and 70%. It is for Deleted: it is still more than the study at hand.

this reason that I believe that the study may not be representative of an increase $15 an hour.

The public cost.

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Another argument for an increase in wages is the public cost of low-wage workers. A

study published by the University of California, Berkleys labor center estimates the public cost Deleted: cites The cost of public assistance to families of
workers in the fast-food industry is nearly $7 billion per
year.
of low wage workers at around $7 billion. (Allegretto et al.). In addition, more than half of these
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low-wage workers are in one or more public assistance programs. These programs include, food

stamps, Medicaid, and Earned Income Tax Credit (Allegretto et al.). The argument is that if

minimum wages were to increase, some of these low-income workers would be able to support

themselves without federal assistance. In my opinion, this is one of the strongest arguments for

an increase in minimum wage. If things were to work as suggested, it would be beneficial for

everyone, not just the low-income workers. Instead of billions of tax dollars going to public

assistance, some of the money saved could be allocated to other places.

Those who oppose raising the federal minimum wage typically cite job loss as the largest

concern. This job loss leads me to fear raising the federal minimum wage. If the unemployment

rate were to increase because of an increase in minimum wage, it would almost be

counterproductive. The people who were struggling to make ends meet with an income would no

longer have that to support themselves. How would someone like Crystal Dupont survive if she

were to lose the little income she had? Crystal might be forced to apply for public assistance.

Which would only further increase the public cost of low wage-workers. That said, this concern

is completely valid. There are multiple ways that an increase in minimum wage could likely lead

to job loss.

Automation takes over.

To many economists, a threat to employment rates is the implementation of automation in

businesses. If you have been to Panera Bread recently, you may have noticed along the wall a

few IPads where you could avoid interpersonal contact, order, and pay. Many economists argue
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that raising the federal minimum wage would lead many business down a similar path. Forbes Formatted: Font:Italic

contributor and former CEO of McDonalds, Ed Rensi, describes this push for automation in his

article. He says, In 2013 I and others warned that union demands for a much higher minimum

wage would force businessesto replace full-service employees with costly investments in self-

service alternatives. His concern was validated in 2016 when McDonalds announced, a Deleted: announced

nationwide roll-out of touch screen self-serve kiosks (Rensi). It is undeniable that technology is Deleted: Thanks to Fight for $15

beginning to creep into our daily lives. There are fully-autonomous restaurants beginning to

sprout up throughout the country. One of the better-known ones, Eatsa has five restaurants in

operation. It is an unlikely coincidence that all five locations are in states that have embraced $15

minimum wage (Rensi). However, incorporating this type automation into a business is Deleted: (Thanks to Fight for $15

expensive. This means that companies who cannot afford this are forced to make tough decisions

regarding their future. Raising minimum wage would begin a vicious cycle of job loss and

eventually many businesses would be forced to close their doors entirely.

Ed Rensi, cites California as a prime example of the impact of rising labor costs. Deleted:

California is one of the first states to announce a plan to implement a $15 an hour minimum

wage (Gibson). Although this plan is obviously popular with many living on minimum wage, the Deleted: , Will Raising the Minimum Wage

real cost is already beginning to be seen. Rensi cites that nearly one-quarter of restaurant

closures in the Bay Area cited labor costs as one of the reasons for shutting down operations.

(Rensi). That is frightening. What would happen to the national economy if the federal minimum Deleted: Thanks to Fight for $15

wage was increased to a level like that of California? Would your favorite mom and pop coffee

shop be forced to close their doors? And it does not end there. How would the owners of said

coffee shop make ends meet? If the national unemployment rate were to increase, there would be

a surplus of qualified people seeking jobs, thus hurting the owners odds of finding a new job.
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This domino effect could significantly affect millions of people nationwide. Jeff Clemons an

assistant professor of economics at the University of California, San Diego studied the

correlation between an increase in minimum wage and the unemployment rate in the late 2000s.

He says, I'm willing to take the stand that the full set of minimum wage increases enacted over

this period is responsible for a decline of around 1 million jobs (Soergel). A million jobs lost, Deleted: , Pay Wars

that means millions of potentially affected by the increased minimum wage. Not only did those

jobs help put food on the table for American children but they helped some teens pay their way

through school. This would only further increase the economic stress for these Americans.

The United States is not the only country struggling to make a decision regarding

minimum wage. A study published by Devanto Shasta Pratomo, an Indonesian economist,

researched the effect minimum wage had on youth employment. Studying the employment rates

of men and women, young and old. Pratomo concludes that although it differs between gender as

well as local environment, an increase in minimum wage decreases the probability of youth

being employed. (Pratomo) Why might this be? If it is true that minimum wage increasing leads Deleted: , 252

to higher unemployment in general. A surplus of older, well qualified employees is looking for a

job. This means those teenagers who are just getting into the work force are likely placed below

those with more experience. While this study took place in Indonesia, I do not believe that it is

unrealistic to say it is likely true in the United States.

The real cost.

Many economists argue that the unemployment rate is not the only thing threatened by a

minimum wage increase. In the case of smaller businesses, ones with already slim profit

margins, even an increase of a dollar or two could skew the entire business plan. James Sherk, in

his report for The Heritage Foundation, cites that small business or fast food restaurants operate
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in highly competitive markets. This means that the typical fast food restaurant makes around 3 to

5 cents on the dollar (Sherk). For a business to avoid failure it would be forced to push that extra Deleted: $15 Minimum Wages

cost onto the customer. Sherk again argues that, typically an increase in price would mean a

business loses customers. However, in the case of federal minimum wage, the entire fast food

industry would have to raise their prices. Thus, the new, increased prices become the competitive

prices (Sherk). In Business Insider, Reihan Salam, cites similar reasons as Sherk. Salam argues Deleted: $15 Minimum Wages

that an increase in prices would affect almost everyone, not just the rich. He says, But of course

it will often be the poor people who pay them [higher prices], particularly in poor states

(Salam). Meaning, even those who would receive an increase in pay would be forced to pay Deleted: Raising the Minimum wage

higher prices for many things essential to daily life. This leads many to conclude that even if

minimum wage were to increase, the additional costs of daily goods would keep the buying

power around the same.

Is change necessary?

In short, yes something should change. It should not be the case that someone like Crystal

Dupont struggles to survive despite working full time. However, before we go out on the streets

and join the Fight for $15, I believe we should accept that $15 an hour is too much. An increase

to that degree is astronomically more than ever before. Although there is debate about the actual

number, adjusting for inflation, the highest minimum wage, back in 1968, was around $10.80 in Deleted: .
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2015 dollars (Rogers). I am concerned that raising the minimum wage too high would hurt our Deleted: was
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economy. High unemployment hurts the economy for obvious reasons. However, less obvious is Deleted: , Adjusted for Inflation

the effect price increases has on the economy. When prices increase, everyone must be more

conscious regarding where they spend their money. When people are more conscious about their
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spending, non-necessities are typically left on the shelves. If this were to happen, it would only

lead to more business closing further adding to the unemployment rate.

Now, here is my proposition for increasing the federal minimum wage. I believe that a Formatted: Indent: First line: 0.5"

minimum wage in the range of around $10 an hour is not unreasonable. However, to protect the

economy, it should be increased gradually. After each increase, economists should analyze the Deleted: While the minimum wage is increasing, if there
seems to be a negative effect on the econom

effects of the increased wages. If the economy starts to decline after an increase, the increases Deleted: y
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should temporarily stop until the economy settles. Therefore, setting a specific deadline like Deleted: The gradual increases should cease

congress has proposed is not the best option. With a deadline, congress has an incentive to Deleted: would be forced

continue the gradual increases regardless of the negative economic impact. Although I do not

support deadlines, for that reason, I believe that minimum wages would be able to reach a

satisfactory amount within a decade. I believe that the economy should help dictate minimum

wage increases rather than the other way around. In my opinion, there is enough evidence that

minimum wage increases can have negative effects on the economy with regards to both

unemployment and the overall costs of goods. To conclude, I believe that increasing the

minimum wage is necessary; however, increasing it too much, like that proposed by the Fight for Deleted: however

$15 will likely end up hurting the economy and Americans. Deleted: .

Deleted:
... [1]
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Works Cited Deleted: ... [2]

Formatted: Line spacing: double

Allegretto, Sylvia, et al. Fast Food, Poverty Wages. Labor Center, University of California, Formatted: Indent: Left: 0", Hanging: 0.5", Line spacing:
double

Berkley, 15 Oct. 2015, laborcenter.berkeley.edu/pdf/2013/fast_food_poverty_wages.pdf.

Accessed 5 Apr. 2017. Deleted:

Gibson, Kate. Will raising the minimum wage to $15 an hour kill jobs? CBS News, CBS, 1

Apr. 2016, www.cbsnews.com/news/will-raising-minimum-wage-to-15-an-hour-kill-

jobs/. Accessed 5 Apr. 2017. Deleted:

Kasperkevic, Jana. Congress to propose bill raising US minimum wage to $12 by 2020. The Formatted: Line spacing: double

Guardian, Guardian News and Media, 30 Apr. 2015, www.theguardian.com/us-

news/2015/apr/30/us-congress-democrats-minimum-wage-12-by-2020. Accessed 5 Apr.

2017. Deleted:

Linn, Allison. By the grace of God: How workers survive on $7.25 per hour. NBCNews.com, Formatted: Indent: Left: 0", Hanging: 0.5", Line spacing:
double

NBC Universal News Group, 6 Mar. 2013, www.nbcnews.com/feature/in-plain-

sight/grace-god-how-workers-survive-7-25-hour-v17195815. Accessed 5 Apr. 2017. Deleted:

Pratomo, Devanto Shasta. How does the minimum wage affect employment statuses of youths? Formatted: Line spacing: double

Evidence of Indonesia. Journal of Economic Studies, vol. 43, no. 2, 30 July 2014, pp.

252274. EBSCO,

www.emeraldinsight.com.librarylink.uncc.edu/doi/pdfplus/10.1108/JES-07-2014-0131.

Accessed 5 Apr. 2017. Deleted:

Rensi, Ed. Thanks To 'Fight For $15' Minimum Wage, McDonald's Unveils Job-Replacing Formatted: Indent: Left: 0", Hanging: 0.5", Line spacing:
double

Self-Service Kiosks Nationwide. Forbes, Forbes Magazine, 4 Dec. 2016,

www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-
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mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#319246524fbc.

Accessed 5 Apr. 2017. Deleted: .

Rogers, Kate. Adjusted for inflation, the federal minimum wage is worth less than 50 years

ago. CNBC, CNBC, 25 July 2016, www.cnbc.com/2016/07/21/adjusted-for-inflation-

the-federal-minimum-wage-is-worth-less-than-50-years-ago.html. Accessed 5 Apr. 2017. Deleted:

Salam, Reihan. Raising the minimum wage to $15 an hour would hurt millions of vulnerable

people. Business Insider, Business Insider, 25 Apr. 2015,

www.businessinsider.com/raising-the-minimum-wage-to-15-an-hour-would-hurt-

millions-of-vulnerable-people-2015-4. Accessed 5 Apr. 2017. Deleted:

Sherk, James. $15 Minimum Wages Will Substantially Raise Prices. The Heritage

Foundation, The Heritage Foundation, 19 Jan. 2017, www.heritage.org/jobs-and-

labor/report/15-minimum-wages-will-substantially-raise-prices. Accessed 5 Apr. 2017. Deleted:

Soergel, Andrew. Pay Wars. U.S. News & World Report, U.S. News & World Report, 28 Mar.

2016, www.usnews.com/news/the-report/articles/2016-03-28/ask-an-economist-will-a-

minimum-wage-hike-help-or-hurt-workers. Accessed 5 Apr. 2017. Deleted:

U.S. average price of milk per gallon 1995-2016. Statista, Statista, Formatted: Line spacing: double

www.statista.com/statistics/236854/retail-price-of-milk-in-the-united-states/. Accessed 5

Apr. 2017.
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