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The Minimum Wage

March 9, 2013

This is inevitable. Just understand the tradeoffs involved in raising the minimum wage. It means higher hourly earnings for a smaller group of workers. It will also have a disproportionate¬†impact on young people. About 30% of the workers in the U.S. earning the minimum wage are teenagers. The logic is pretty straightforward: if I’m a small business owner and my wage costs are increased significantly without a corresponding increase in my revenues, I have to cut costs elsewhere in order to maintain the same level or profitability. Instead of 15 minimum wage workers, I’ll make due with 13. If you ask why that business can’t just make due with less profit, you don’t understand how things work. The vast majority of small businesses bring in less than $5 million and operate on thin margins as it is.

http://blogs.cfr.org/geographics/2013/03/07/minwage/?cid=soc-Twitter-in-economics-Obama_Minimum_Wage_Hike_Hit_Employment-030713

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From → Labor Issues

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