Minimum wage: An argument against raising pay By Lindsey Takahashi

Economics Mrs. Hodge 23 January 2012

Minimum wage: An argument against raising pay Within the year 1938, the Fair Labor Standards Act (FLSA) was signed and put into effect, allowing for the creation of the Wage and Hour Division (WHD). Comprised of several investigators as well as technical and clerical employees, this department of the federal government is responsible for the enforcement of laws regarding all types of employment within the United States. Among the many things that they oversee, this administration determines the minimum amount of pay that a worker can receive. Ever since the formation of the WHD, the greatest debate concerning labor economics includes whether or not it is advantageous for the minimum wage within the Unites States to be raised. Over the years, the minimum wage has been increased to counterweigh the change in inflation. But many argue that because its actual value has not changed due to inflation, it needs to be changed in order to support those in need of employment. Although there are many scholars and theories to support both sides of the issue, it is more apparent that it is not beneficial for both workers and employers if the minimum wage continues to be raised. Firstly, it is not helpful to the business for the minimum wage to be added to. If an employer decides to increase the minimum wage, in order to compensate, the cost of the product he sells will increase. If this product is exported, countries or states that have not compensated for a raise in price themselves will not be able to afford to import it. These buyers will turn to other businesses that sell the product a lot cheaper. As a result, demand for the product will go down, and the employers business will slow. Once the business begins to fail, there is no longer a steady flow of profit for the employer. Supporters of an increase in minimum wage claim that it helps those in need of employment, but if

an employers prices go up and he is unable to sell, he does not have the funds for employees. This means that he will have to dismiss much of his workforce, creating a mass of people living jobless, and possibly in poverty. Therefore, the increase in minimum wage would be completely counterproductive. Lastly, high minimum wage decreases opportunities for first-time workers, as well as disabled individuals and those on welfare. High minimum wage means that the employer will be looking for high-skilled applicants. Because many disabled individuals, people on welfare, and first-time workers such as high school students lack opportunities for experience, they are at a disadvantage. They are competing against those who have specialized skills, and therefore will lose the fight for the job. Because of this, the availability of jobs becomes very slight. Ultimately, an expansion of minimum wage is not favorable for anyone. It can only hurt businesses by making their products more expensive. Consequently, this raise offends the employees by getting them laid off. Not only can people get terminated from their jobs, but lowskilled workers and first-time workers will have great difficulty finding and applying for work within in the United States.

Works Cited O'Sullivan, Arthur, and Steven M. Sheffrin. Prentice Hall Economics: Principles in Action. Boston, MA: Pearson/Prentice Hall, 2007. 238-39. Print. Saxton, Jim. "The Case Against a Higher Minimum Wage." The United States House of Representatives House.gov. May 1996. Web. 23 Jan. 2012. <http://www.house.gov/jec/costgov/regs/minimum/against/against.htm>. "U.S. Department of Labor Wage and Hour Division (WHD) Wage and Hour Division History." The U.S. Department of Labor Home Page. 2009. Web. 23 Jan. 2012. <http://www.dol.gov/whd/about/history/whdhist.htm>.