Raising the Minimum Wage - Article Example

number Minimum wage is the least money earned for work done. When the wage is increased, it has various effects on the economy. The increase in the minimum wage leads to job scarcity in the economy. Statistics have shown that 60% of poor people do not work. Therefore, when the minimum wage is increased, it makes people have a hard time getting a job. This is because the worker must bring more value to the firm as they are paid to avoid a case where the firm will fail. According to the article, “Raising the minimum wage will harm economic growth,” raising the minimum wage is a freedom killer as it denies low-skilled workers the opportunity to get a job and receive ‘on the job’ training.

The most affected are the young workers looking for the first opportunity to have a job as they have no experience. Also, the increase in the minimum wage reduces the freedom of American citizens in spending. This is because there will be an increase in the price of services and products in the economy (Schmitt, 18). Also according to the article, “Why Does the Minimum Wage Have No Discernible Effect on Employment,” research has evidently shown that minimum wage has no discernible effect on the employment practice of low-wage earners.

This is because the cost of the minimum wage in most firms is relatively small and employers have many channels of adjustments. One channel of adjustment is that employers may reduce their expenditures on job training for low-wage workers. Employers may also adjust by upgrading the skill level of their workforce and working against the employment of less-experienced and less-educated workers. Employers in a highly competitive economy may also respond to a high minimum wage by passing the added cost to the consumers in the form of high prices (Schmitt, 16).

In conclusion, employers can cut pay to more highly paid workers, shift the composition towards higher skilled workers and accept a smaller profit margin as the minimum wage has no discernible effect on employment. As for the workers, they may respond to the higher wage by working harder on the job and reducing labor turnover which enables the employers to save on cost.