Wage laws cause many problems for employers
Wes Mayle
Issue date: 4/14/09 Section: Special Report
Sure, it's hard to live on minimum wage, especially since the wage is considered below the poverty line. But, one of the problems could be that having a minimum wage at all serves as an "interference" to the job market.
Mark Thompson, Cree-Walker chair of business administration, admitted that he is in the minority of economic experts who support an abolishment of minimum wage.
"If we were to raise it to some poverty line, my concern is that would raise the unemployment," he said. "It would have people that were willing to work at that, willing to do that job, (then) yes, they might be below the poverty line, and yes, we all look at it and say, 'That's difficult.' But, the alternative might be making nothing."
Since employees enter the job market voluntarily, the wage should be up to how valuable the job is to the employer, according to Thompson.
He said that with a higher minimum wage, the job paying $5.15 an hour may disappear when a business owner decided the amount of labor required for that job isn't worth either $6.55 or $7.25 to him.
"When we enter into the labor market, we enter into it voluntarily," Thompson said.
"We go into an employer. An employer posts, 'I need this job (filled), and I value it this much to where this is what I want to pay.' And so, if I then say, 'You know, I'm willing to do that job for $5.50 an hour.'
"When the government then forces there to be a minimum, and further more, raising it to $7.50, well now that business may be put into a position and say, 'I don't value that job at $7.50 an hour. I valued it at $5.50, maybe even 46, but not $7.50 an hour.' So they're put into a position to possibly let this person go."
The federal government raised the minimum wage from $5.15 to $6.55 as of July 24, 2008, according to the Department of Labor's Web site.
The figure is set to jump up this year to $7.25 on July 24 of this year.
Thompson said when the federal government decided to raise the minimum wage, a lot more people opted to go about their lives differently than before the wage was elevated.
Mark Thompson, Cree-Walker chair of business administration, admitted that he is in the minority of economic experts who support an abolishment of minimum wage.
"If we were to raise it to some poverty line, my concern is that would raise the unemployment," he said. "It would have people that were willing to work at that, willing to do that job, (then) yes, they might be below the poverty line, and yes, we all look at it and say, 'That's difficult.' But, the alternative might be making nothing."
Since employees enter the job market voluntarily, the wage should be up to how valuable the job is to the employer, according to Thompson.
He said that with a higher minimum wage, the job paying $5.15 an hour may disappear when a business owner decided the amount of labor required for that job isn't worth either $6.55 or $7.25 to him.
"When we enter into the labor market, we enter into it voluntarily," Thompson said.
"We go into an employer. An employer posts, 'I need this job (filled), and I value it this much to where this is what I want to pay.' And so, if I then say, 'You know, I'm willing to do that job for $5.50 an hour.'
"When the government then forces there to be a minimum, and further more, raising it to $7.50, well now that business may be put into a position and say, 'I don't value that job at $7.50 an hour. I valued it at $5.50, maybe even 46, but not $7.50 an hour.' So they're put into a position to possibly let this person go."
The federal government raised the minimum wage from $5.15 to $6.55 as of July 24, 2008, according to the Department of Labor's Web site.
The figure is set to jump up this year to $7.25 on July 24 of this year.
Thompson said when the federal government decided to raise the minimum wage, a lot more people opted to go about their lives differently than before the wage was elevated.
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