Possible Minimun Wage Raise in Michigan

[Doug]

I don't know if anyone else has heard, I'm sure Chris has, but there is a bill to raise the minimum wage in Michigan that I am afraid will most likely pass. They plan to raise it to $6.95 an hour on October 1st and eventually see $7.40 an hour by 2008. Am I the only one who thinks this is a very bad idea?

Sure all of the people making minimum wage are going to be happy but what about everyone else who doesn't get a raise? The price of everything will go up to pay for the higher wages so the people who didn't get a raise will have less money. I make close to minimum wage right now ($7.00 an hour) and I am still completely against this and I was six months ago when I was making 5.50 an hour.

I live in a small town that is kept alive by small businesses and I know if this wage increase goes through most of those businesses will have to close their doors. It is going to destroy this town along with the hundreds of other identical small towns all over Michigan. Michigan's economy is very unstable right now and this is going to tip it in a very bad direction.

Thats my take on this wage increase bill. But what do I know, I'm just an 18 year old with no "political" background. It's funny, though, how it seems so clear to me that this would be bad and it seems so unclear to those with the background needed to make them realize things like this.

[Shawn]

South Carolina uses the Federal minimum wage amount, $5.15. We don't have a state law.

You guys are rich.

[MarkB]

My POV is, if people get paid more, they will spend more. Keeping wages low will do more harm to an economy than paying the lowest-paid workers a little more.

[KLB]

Maine is about to pass a minium wage raise that will raise the minumum wage to $6.75 this year and then $7.00 next year. Someone pointed out that this will only add $10 per week to an minimum wage employee's pay check for each raise. This isn't much, but it will allow an employee to buy another gallon of milk and a couple loaves of bread.

One proposal that is also being considered in Maine is a brief training wage that would be lower and/or a lower minimum wage for employees below a certain age. I can understand this, but I can not understand denying someone a basic living wage.

The fact of the matter is that any wage that is much below $10 per hour leaves the employee well below the poverty line and a minimum wage that is even below $7.00/hr is so low that one can not survive on it if they have the normal expenses of an adult.

The business community has alway claimed these types of wages will destroy local businesses but this never pans out. Yes it raises the costs of some goods, but it really doesn't have as big of an impact on inflation as those who like to predict doom claim.

Why should society be forced to support some people with food stamps and social services, just because society wants cheap Big Macs?

[KLB]

Here's an article on Maine's minimum wage hike. I guess it passed the state legislature and the amendments were defeated.
http://www.boston.com/news/local/maine/articles/2006/03/07/senate_joins_house_oks_minimum_wage_hike/

[Chris]

The proponents of this bill say that its hard to raise a family on minimum wage. I agree, it is hard, however how many people do that?

The newspaper said only 80,000 people in Michigan make minimum wage. There are more employed teenagers than that, so I can only assume that most people earning at that level are not supporting a family.

In the end I see this move resulting in more unemployment, (Michigan is already one of the worst in the country with jobs). Not-that-necessary jobs in big businesses will be canned. The people who advertise on street corners with signs, greeters at grocery stores, cleaning people. Instead of 80,000 people making minimum wage we'll end up with 40,000 people making minimum wage and 40,000 people on welfare/unemployment.

Plus you know I'm for personal responsibility. McDonalds starts people out at higher than minimum wage, so if you're stuck at minimum wage currently that means that you aren't good enough to work at McDonalds. If that is true, do you really deserve a raise?

Really though it all comes down to jobs, new businesses will be less likely to come to Michigan with a higher minimum wage. Atleast though I think another group is trying to repeal the business tax, so if that is successful it should help.

[KLB]

What I find instresting about this debate is that minimum wage raises traditionally do not keep up with inflation. Even Maine's minimum wage raises only work out to a 3% raise each year.

I do think restructuring business taxes could do more to help small businesses than the minimum wage increase does harm. Here in Maine, taxes are darconian and at times really unfair.

[Chris]

You know, if you work out the percentages, its practically a raise of 30%, nearly 50% for people who get tips. If wages is the largest cost for your business, then that is seriously going to squeeze your bottom line.

[KLB]

I don't see how you do your math Chris. I personally see nothing wrong with pegging the minimum wage to the rate of inflation. Doing any less is essentially giving minimum wage employees a pay cut each year because their earnings has less and less buying power.

As far as a negative impact on the economy goes, this is a claim that has been made any time this issue has been raised since the very first minimum wage. The dire consequeces of minimum wage increases have never proven to be true. As far as squeezing the bottom line, I've never seen any company allow this to squeeze their bottom line. In fact, I'd say that artificially low minimum wages (e.g. wages that don't even meet the needs of a basic living wage), do more to squeeze the bottom lines of companies that try to be responsible to their employees and try to pay a wage that employees can really live on. The reason being that they have to compete against companies that don't care about their employees. I think we can all think of a few well known companies that use low wages as a way to undercut their competition.

[The New Guy]

Its basic Economics. States will continue to adjust the minimum wage depending on the workforce levels. When you increase the minimum wage you increase available workforce. And vice versa. So if the workforce is to small, which it may be, a minimum wage increase may help. Minimum wage is difficult to use as a means to help poverty for many reasons I wont go in to.

[Sagewing]

Agreed it a complex issue, but historically the raise of the minumum wage has NOT brought the problems that many employers feared. Overall, it's a good thing for everyone.

[Chris]

The fundamental difference between socialism & capitalism is the principle of supply and demand.

There is a supply & demand issues with workers & employers. Workers compete for jobs, employers compete for workers. An employer will be able to attract a high quality worker by paying more, a worker will be able to make more money by increasing their skills/being responsible.

There is also a supply & demand issue with states & businesses. States compete against each other for new business. If a company is going to open a new plant they will open their plant in a location that is most advantageous. They will consider things like the availability of skilled workers, and the cost of doing business in that state.

It is very darwinian, and that is why capitalism works where socialism fails. There is incentive to be better because it opens up more opportunity for you.

By raising minimum wage there is no longer an incentive for the $5.15 an hour worker to try harder so he can earn $7 an hour. He gets it anyways. If his employer has to pay him $7 an hour and his labour is only worth $5.15 an hour to the employer then the employer is likely to fire him and hire someone who produces labour worth $7 an hour. Thus instead of helping people you just send them to the State for government handouts because they are unemployed and either through lack of skill or lack of responsibility they are unable to produce labour worth as much as minimum wage dictates that they be paid.

The real culprit behind poverty is not low wages, but lack of education. You need to attack the problem at it's source. In fact the higher minimum wage gets the less likely people will be to value education. Not in the higher ends to be sure, but if you're talking about the difference between the earnings potential of someone with say a 2 year degree from a technical college compared to a highschool dropout, well eventually that difference will be small or nonexistant if you continue raising the minimum wage. The end result of this is that you remove the economic incentive for finishing highschool and or getting some sort of higher education.

Personally I believe in natural selection as the best method for progress, both biologically speaking and in business. So anything that lessens competition is a bad thing.

I don't think everyone has a right to a good job, or to make a certain amount per year. I think it is far more important that society reinforce good values on the younger generation. If you're an irresponsible highschool dropout you shouldn't automatically get a pay increase, it sends the wrong message. Yes, making minimum wage should suck, because if it doesn't suck people won't be afraid of it, and if they're not afraid of it then they won't better themselves, and if the people within a society do not better themselves then the society does not get better.

The bottom line for me is that a lower minimum wage provides an economic incentive to stay in school, get educated, and be responsible. It also encourages business growth and new business moving into the state. It also makes it easier for teenagers to get jobs either for spending money or to help out their families.

OBviously this thread has turned somewhat political, and that is not something I want here, so I'm closing it.