Federal Minimum Wage going up today

[bjl584]

At $7.25 an hour a worker that makes minimum wage and works a 40hr week will make an extra $28 per week depending on the state that they are in. Some say that this move will further hurt an already struggling economy. Others say that it will help those making low wages. Any thoughts?

[kork13]

I personally feel that increasing minimum wage only drives inflation. Companies (big, small, and otherwise) employing minimum wage workers are all going to see their operating costs go up, and they have 2 options: eat the cost (cutting into profits), or pass it on to consumers. In any normal business model, the latter will happen. Yea, min. wage workers get a pay boost, but everyone also gets prices inflated. I fail to see the benefit to society....

ETA: I just remembered one other possible result of the higher min. wage: businesses "let go" of some of their employees in order to keep both their bottom line and prices unchanged. So once again -- benefit...? I can't see it.

[GREENBACK]

I personally feel that increasing minimum wage only drives inflation. Companies (big, small, and otherwise) employing minimum wage workers are all going to see their operating costs go up, and they have 2 options: eat the cost (cutting into profits), or pass it on to consumers. In any normal business model, the latter will happen. Yea, min. wage workers get a pay boost, but everyone also gets prices inflated. I fail to see the benefit to society....

ETA: I just remembered one other possible result of the higher min. wage: businesses "let go" of some of their employees in order to keep both their bottom line and prices unchanged. So once again -- benefit...? I can't see it.

I couldn't agree more. Too bad those in charge don't understand how buisness works. This is stupid on so many levels.

[disneysteve]

I agree. Minimum wage isn't good for anybody. I say let the market decide.

[irmanator]

Mom and I argue about this all the time. lol I am inclined to beleive it is no good. She never really understood economics or finances and thinks it is great. Mom does not always know best.

[FrugalTexan75]

Well, I can give a real life example.

I currently work at a gym as an "independent contractor." Everyone gets minimum wage. So, our pay rates all went up on Friday.

Guess what else went up? The gym fees. The quarterly membership increased by $15, the yearly by $35, and the 2-week trial by $3.

So, though it'll be nice to see a bigger number on my paychecks, I have the niggling feeling that it really isn't going to make too much of a difference due to a lot of other companies also raising their prices.

[Joan.of.the.Arch]

FrugalTexan, I'm not sure minimum wage even applies to independent contractors. I mean don't you set your own rates as a contractor? I don't think what you charge can be called a wage. Have you ever checked the IRS requirements for someone to be considered an independent contractor? I think minimum wage applies only to actual employees.

[Inkstain82]

Business interests kick and scream about every minimum wage increase, even when it continues to lag well behind inflation.

Letting the market decide with no protection to workers is a quick way to a feudal system.

[disneysteve]

somehow we end up making the same mistakes time after time .

Exactly. The government is notorious for this. They just don't seem to see the consequences of their actions.

We need to stimulate consumer spending. Let's raise the minimum wage at a time when businesses are struggling to stay in business. Force employers to spend even more on payroll when they are barely making ends meet as is. The result will be either more layoffs to reduce spending or more businesses shutting down entirely, most likely some of both.

[FrugalTexan75]

FrugalTexan, I'm not sure minimum wage even applies to independent contractors. I mean don't you set your own rates as a contractor? I don't think what you charge can be called a wage. Have you ever checked the IRS requirements for someone to be considered an independent contractor? I think minimum wage applies only to actual employees.

Joan,

Yep, that's why I put the words independent contractor in quotes. I'm not quite sure how they get away with calling us IC's, but they do. I was very surprised when I found out that they were raising our rates to the new min. wage. Probably did it because they wouldn't be able to get anyone to work there for less than that. (new people)

[GREENBACK]

Buisnesses across the board are going to raise prices the way I see it. It is the only logical practical way to protect your bottom line. I think increases on things like minimum wage are purely political. Those who think this is so great will vote for those who made it happen, not realizing all they did was inflate prices on everyone.

[disneysteve]

Buisnesses across the board are going to raise prices the way I see it. It is the only logical practical way to protect your bottom line.

But how can they raise prices in the current economy. Most businesses are slashing prices to keep customers coming in and buying product. There simply isn't customer support for higher prices right now. I think we are more likely to see further staffing cuts to make up the money needed for the higher wages. I guess they'll raise prices where feasible and reduce staff where raising prices isn't feasible. Maybe instead of giving the minimum wage worker 40 hours/week, they'll cut him back to 36 hours/week. That will balance the pay increase.

[Joan.of.the.Arch]

FT, I hadn't caught onto that with the quotation marks. Now I'm a little more suspicious. I'm wondering if it is possible the people you work for voluntarily raised their payments to you because they are afraid someone might otherwise report them to the state labor board which would investigate and then find out that these people they are calling independent contracts really are not legally independent contractors. If that were so they would owe back taxes on everything they've paid you and the others. Are you a personal trainer? I think can see how a PT might work as a contractor in someone else's gym, but I sure can see how it would work as an employee.

[GREENBACK]

But how can they raise prices in the current economy. Most businesses are slashing prices to keep customers coming in and buying product. There simply isn't customer support for higher prices right now. I think we are more likely to see further staffing cuts to make up the money needed for the higher wages. I guess they'll raise prices where feasible and reduce staff where raising prices isn't feasible. Maybe instead of giving the minimum wage worker 40 hours/week, they'll cut him back to 36 hours/week. That will balance the pay increase.

They can raise prices slightly and incrementally to the point that few notice;including, those getting the increase. Cutting jobs is a possibility and one small buisnesses may have to consider.

The point is that something has to give and it's a idiotic, polically driven, no win situation for the american people. I want to fire all the idiots in Washington for doing this stuff.

[Seeker]

This is not something newly thought up.... this is the third and final 70 cent increase that has happened on July 24th of the last three years.

President Bush signed this, and Congress approved. So... 7/24/07 $5.85 ; 7/24/08 $6.85 and 7/24/09 $7.25. Prior to these increases, there had been no Federal increase since 1997.

I understand that the cost/price will adjust, but you also need to understand that this is overdue.

People earning minimum wages need whatever help they can get.

Prices will always adjust to market value.

Not all employers "abuse" salary ; but in the end, people have the choice to move on if their salary does not meet their requirements. And people have to balance the ramifications of the choices they make.