FALSE NARRATIVE: If we eliminated the minimum wage, companies would cut worker wages. REALITY: We had quite a few people repeating this notion during our discussion of minimum wage this week. And Ive even heard it said that wed all somehow end up working for slave wages if the minimum wage was revoked. Its flat out wrong, and would contravene the laws of supply and demand. 1. First of all, only workers being paid minimum wage are at risk. Those above it are already being paid more voluntarily by their company. But those AT the minimum wage might see their wage reduced if the only reason they were being paid the minimum wage was because the law forced their employer to do so. That means 1,532,000 out of Americas 145,669,000 workers are at risk. Thats 1.2% of the working population, which already debunks the notion that wed all be working for slave wages. [1] 2. But what about those 1,532,000 workers at risk? Would they be cut down to just a few bucks per hour? Well, of those making minimum wage, 63% get raises in their first year. [2] That means their market value was already close to or at minimum wage. And, as any student of economics will tell you, a company that offers below market wages will lose employees, and a company that loses its employees will not survive very long before its forced to raise wages back up to market level. 3. But that still leaves 567,000 workers. Would they have their salaries cut? Well, companies know that if they cut wages, employees might leave to work elsewhere or to go on unemployment/welfare. For one thing, any cut in pay exceeding 20% is usually considered just cause for leaving a job, and entitles the worker to unemployment.[3] And for another, welfare programs offer benefits that can exceed the value of a many low income jobs. Thus, if a company wants to attract and keep enough employees to stay in business, it has to offer a high enough wage to compete with other companies, welfare, and unemployment. The fact is, if the minimum wage were revoked, any growth in jobs paying less than the minimum wage level would come from new jobs, not from people having their wages cut. REFERENCES: [1]bls.gov/cps/minwage2013.pdf [2]epionline.org/studies/macpherson_06-2004.pdf [3]jobsearch.about/od/unemployment/fl/good-cause-unemployment.htm #minimumwage #livingwage
Posted on: Fri, 31 Oct 2014 00:02:39 +0000
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