Think of the first reaction you’ll have when and if the government decides to raise the minimum wage. One could just picture it, blue skies, all smiles, and not a worry in the world. Well, not quite. More like unemployment sad to say. This right here is the sad reality and much more. Yes, there are benefits to this, but like everything cons outweigh the pros in this situation. Take it from Alex Binkley, an Ontario farmer, “… January employment nationally fell by 88,000. Parttime employment declined by 137,000, while full-time employment rose by 49,000. The result was the unemployment rate increased by 0.1 percent to 5.9 per cent.” Even though this takes into account all of Canada, these numbers are scary. Just alone how fast that unemployment rate went up is concerning. Usually 4% is low in the U.S, but they have ten times greater the population as Canada which should also be taken into account. Truthfully, not everything can be of benefit to one’s own needs. Not only will unemployment will go up, but the younger lower skilled workers will never get hired again. To put it in economic terms from Brown, Gilroy Kohen, “Without a minimum wage, the monopsonistic employer’s marginal cost of labor everywhere exceeds the supply price.” One could say too that the owners were overall losing profit since they would have to pay their workers more. Furthermore, the main reason why businesses open is to make profit. Even though one could argue to create new jobs, however that would be wrong.
In addition to the unemployment numbers rising, and making our countries economy look bad. Another cause of the increase of wages would be inflation. And not talking about a dramatic change in the money values, but it would be noticable. For example take gasoline for example. Those prices have constantly fluctuated for the past couple years, and if one takes notice it has started to increase a couple cents here and there. Another example from the Alberni Valley Times, “ferry rates go up April l. Why? The union employees receive their annual two per cent wage increase April l just like they every year from 2010 to 2014. In this world, you cannot have your cake and eat it too. Want to pay top wages to union employees? Then pay higher fares. That is called life.”It is a dog eat dog world and that’s how people make money. The government is like that and when there is a chance to make money from the people they’re going to take it. With some more economic terms the businesses with monopolies will take advantage since they own all that product and increase the price if there is inflation. It is scary to think that with the poverty already in this country we still want to raise the minimum wage to something absurd like $15 an hour. Granted yes, there should be change, but there is some opportunity cost to that. As little as it may seem each cent is increased there could be a potential person trying to support a family getting let go. It is the hard truths we face today as a society.
To tie both of these things together we see that the economic cons are more likely to outweigh the pros if there’s an increase. Not saying that it should not be increased a little, however there should be a line drawn to how far one goes. Into a smaller point the use of technology will see an increase in the workforce. Take franchises for example, McDonald’s. Most if not all the workers are on minimum wage. There has been a change where the restaurants now have self serve kiosks, which means no need for cashiers, cutting most jobs. As the Pittsburgh Tribune states, “f a machine can do for a cost of 7 per hour what a worker must be paid at least 7.25 per hour to do, the machine gets the job while the worker gets unwanted leisure.” The point being is these franchises want to make profit and the first thing owners look to cut is salaries. What better way to make money and to save time is to put a machine which the owner won’t have to worry about calling out of work, etc. Just think of how much money they’d save in both the long and short run.
Boudreaux, D. J. (2018, Jul 27). Minimum wage & technology. Tribune – Review / Pittsburgh
Tribune – Review
Binkley, A. (2018, Feb 20). Ontario sheds 51,000 part-time jobs in january; pace of minimum wage increase in spotlight after major part-time job losses.Ontario Farmer
Sawchuk, J. (2015, Mar 31). Minimum wage increase creates unemployment.Alberni Valley Times
Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. “The Effect of the Minimum Wage on Employment and Unemployment.” Journal of Economic Literature, Vol. 20, No. 2 (June 1982), pp. 487-528.