Lets talk economics. This is one of my least favorite subjects, and I hated taking the macro and micro classes at BSU. So you know when I talk economic it's about to get real. There has been lots of talk about raising the minimum wage. And honestly I cannot see this going well at all if it goes through. I foresee people losing their jobs, not getting jobs, and the unemployment rate skyrocketing. Here is why I think so.
Let's start with supply and demand. Say I have a taco stand that I hire someone to run. I sell each taco for $5 and during one lunch hour I sell 10 tacos. So that is a gross earnings of $50. If the minimum wage is $7 then it's more like $43 (we are leaving out cost of supplies because that's just going to start getting confusing). But that's just for my current city. Let's say I send my taco stand out to a city that has a lower population.
Because of the lower population, I can speculate that the demand for my tacos will be less. Less people means less opportunities for sales. In the lunch hour, let's say I only sold 2 tacos. That means my profit after paying wages is only $3. At this point I'm going to start losing money. The supply and demand of jobs is far less in lower populated areas whereas in huge cities like New York, the population is higher, and the profit margins etc reflect that minimum wage can be higher. On top of the fact that many people will not hire someone with no experience for a higher wage. Making the unemployment rate much higher. For example….
Let's say the minimum wage is raised to $9/hr. I'm still just a taco stand. But my employee finds a different job that pays better than minimum wage. No hard feelings. So now I'm in need of a new employee. The one application I get is for a high schooler who has no job experience at all. No experience cooking, no experience with customer service, nothing. I have no desire to hire this person for $9 but because federal law states that I cannot pay less than that, I am stuck. I would much rather pay him a generous $7 for his non existent skill set. So when I get another applicant with some actual experience, I will pass over the high schooler and gladly hire said person for $9/hr. In retrospect how is the high school kid supposed to get experience, and get a job that will hire him for $9/hr? Schooling, certificates, etc.
On top of this, to keep my profits the same, I’m going to have to raise my prices. As does everyone else who wants to keep their profits. What do you think that will do for your $2 raise? It will be equally as hard to cover your expenses. The price of everything just went up. You will essentially be making the same, struggling the same, etc etc. The price of living will go up with the minimum wage. If you have a minimum wage of $9/hr the lower populated areas will either lose workers, or cut hours. Heck it might even run some places out of business.
