Higher minimum wage not a panacea for all

Tuesday, June 7, 2016
 | 
Chris Woodward (OneNewsNow.com)

minimum wage illustrationWhile they are among the common arguments in favor of helping people make ends meet, not everyone sees positives in raising the minimum wage or expanding collective bargaining.

Ryan Young of the Competitive Enterprise Institute says increasing the minimum wage and/or expanding collective bargaining does help make some people better off – but he says there are trade-offs that hurt other people. "So, on balance, they don't increase human well-being on net," he states.

According to Young, a lot of people think with their hearts more than their heads. "And of course, any sound reasoning requires both – but when you look at someone who benefits from an increased minimum wage, it makes it a little easier for them to make the rent or pay the electricity bill. But what about everyone?" Young wonders.

"When you have a higher minimum wage, maybe some workers get their hours cut so they don't actually make more money and can't pay their bills the same way; [or] maybe they get reduced fringe benefits on the job."

Young, Ryan (CEI)Young adds that some people may never get hired in the first place, especially young people who haven't yet had the opportunity to gain experience and build skills. Similar arguments have been made from individuals, think tanks, and industry groups when it comes to raising the minimum wage.

"I might point out that while some workers benefit from higher union wages, those higher wages affect other people as well," says Young.

"You have higher consumer prices, other workers have to get lower wages, and it reduces purchasing power for everybody else if they have to pay more for the same thing. And as far as public sector unions go, let's not forget that California, Illinois, and New Jersey face potential bankruptcy in the next few years – and that's mostly because of their union employees' pension obligations."

One thing is for certain: the debate is far from over – especially in an election year.

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