New York lawmakers adopted a draft law aimed at increasing the minimum wage up to $ 9 an hour earlier this year. But experts estimate family of four needs at least $11 to live above the poverty line. In Congress, 92% of Democrats and 62% of Republicans support the wage increase. However the increase of minimum payment would also have some very negative side effects. A higher minimum wage would mean higher prices at retail stores and restaurants. It would also prompt corporations to continue replacing American workers with foreign employees or with technology. The VoR spoke with Bill Schmick - an investment adviser representative with Berkshire Money Management - an asset management and advisory company in Massachusetts.
Is it true that raising the minimum legal wage would somehow fuel inflation? Is there such a risk?
No, I don’t really think that raising the minimum wage will fuel inflation. Inflation right now in the US is low, it is so low in fact that the Federal Reserve Bank continues to monitor it and worries somewhat that it would decline further. So, no. And raising the minimum wage wouldn’t affect that many Americans. I would estimate 3-5% of Americans are receiving the minimum wage now. So, I don’t think that raising it would have any problem with inflation.
As far as I know many argue higher minimum wage would undercut America’s competitiveness and kill jobs. Others object that arguing that the current minimum wage is already undercut America’s competitiveness by reducing the quality of the country’s labor force. So, where do you stand in this dispute?
Let’s face it, minimum wages are basically domestic service jobs in the US. You cannot export those jobs because those jobs are at McDonalds and places like that. So, those jobs are here to stay, and either Americans are going to have those jobs or other immigrants will take those jobs but it won’t threaten America by exporting jobs anywhere, if you can understand what I am saying. You can’t buy a Burger King from China, it won’t work. So, a lot of the arguments on what a minimum wage will do in the US, the negatives of it are misplaced at best. The argument that corporations will hire less people if we raise the minimum wage, it really does apply especially if the economy starts to grow. Corporations say that now if the economy begins to grow, you are going to need more and more service jobs, it won’t matter if the minimum wage goes from 7 to 10 dollars, they are still going to hire those people because you have to remember who has those minimum wage jobs. Over 50% of people that have those minimum wage jobs are teenagers or spouses who are already employed. And that is increasing further. Yes, there is a significant minority of people who definitely do need those minimum wage jobs just to take care of their families, a lot of them would be single mothers that are forced to work but need more flexible hours. So, my belief is this – that the minimum wage should be raised because the income inequality issue in the US has become so severe between the haves and the have-nots, corporations aren’t going to voluntarily raise the income level of Americans, in fact they will continue to keep it down. So, if it takes the federal rule of the state government to raise the minimum wage, even though it won’t have a large impact, it will narrow the income inequality gap in America which continues to expand.
Read more: http://voiceofrussia.com/2013_08_20/Raising-minimum-wage-will-not-fuel-inflation-expert-7944/
Tuesday, August 20, 2013
U.S: 'Raising minimum wage will not fuel inflation'
New York lawmakers adopted a draft law aimed at increasing the minimum wage up to $ 9 an hour earlier this year. But experts estimate family of four needs at least $11 to live above the poverty line. In Congress, 92% of Democrats and 62% of Republicans support the wage increase. However the increase of minimum payment would also have some very negative side effects. A higher minimum wage would mean higher prices at retail stores and restaurants. It would also prompt corporations to continue replacing American workers with foreign employees or with technology. The VoR spoke with Bill Schmick - an investment adviser representative with Berkshire Money Management - an asset management and advisory company in Massachusetts.
Is it true that raising the minimum legal wage would somehow fuel inflation? Is there such a risk?
No, I don’t really think that raising the minimum wage will fuel inflation. Inflation right now in the US is low, it is so low in fact that the Federal Reserve Bank continues to monitor it and worries somewhat that it would decline further. So, no. And raising the minimum wage wouldn’t affect that many Americans. I would estimate 3-5% of Americans are receiving the minimum wage now. So, I don’t think that raising it would have any problem with inflation.
As far as I know many argue higher minimum wage would undercut America’s competitiveness and kill jobs. Others object that arguing that the current minimum wage is already undercut America’s competitiveness by reducing the quality of the country’s labor force. So, where do you stand in this dispute?
Let’s face it, minimum wages are basically domestic service jobs in the US. You cannot export those jobs because those jobs are at McDonalds and places like that. So, those jobs are here to stay, and either Americans are going to have those jobs or other immigrants will take those jobs but it won’t threaten America by exporting jobs anywhere, if you can understand what I am saying. You can’t buy a Burger King from China, it won’t work. So, a lot of the arguments on what a minimum wage will do in the US, the negatives of it are misplaced at best. The argument that corporations will hire less people if we raise the minimum wage, it really does apply especially if the economy starts to grow. Corporations say that now if the economy begins to grow, you are going to need more and more service jobs, it won’t matter if the minimum wage goes from 7 to 10 dollars, they are still going to hire those people because you have to remember who has those minimum wage jobs. Over 50% of people that have those minimum wage jobs are teenagers or spouses who are already employed. And that is increasing further. Yes, there is a significant minority of people who definitely do need those minimum wage jobs just to take care of their families, a lot of them would be single mothers that are forced to work but need more flexible hours. So, my belief is this – that the minimum wage should be raised because the income inequality issue in the US has become so severe between the haves and the have-nots, corporations aren’t going to voluntarily raise the income level of Americans, in fact they will continue to keep it down. So, if it takes the federal rule of the state government to raise the minimum wage, even though it won’t have a large impact, it will narrow the income inequality gap in America which continues to expand.
Read more: http://voiceofrussia.com/2013_08_20/Raising-minimum-wage-will-not-fuel-inflation-expert-7944/
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