Coming across a few articles this morning I couldn’t help
but think, “Has anyone connected the dots to bring the country out of the
recession yet?” Countless ideas have been thrown into the mix of possible economic
solutions, but few have any real merit. Student loan debt is approaching $1
trillion, we’re still at 8.2% unemployment with only 120,000 jobs created in
the month of March, and we’re so focused on class warfare that we have essentially
ignored what the free market can provide: good business. It is simply good business
that people will want to invest in opportunities, however, when you stretch
those opportunities in search of what one thinks is, “fair,” then you are only
going to deplete business and string along a sluggish economy. In an article in
Bloomberg Business Week, one advocates to raise the minimum wage so that lower
income households have more money to spend the following year. Here’s the
irony: by raising the minimum wage the government would put more pressure on small
businesses, the main contributors to job growth according to congress’s recent
small business tax break (JOBS Act), and would actually cause a disincentive to
hire an additional worker. So, while the left is so bent on helping the less
fortunate by raising the minimum wage, they’ll actually lose their jobs
entirely. What’s fair now?
If we
see the world from the recent graduate standpoint, raising the minimum wage
will hurt them. If a business is now required to pay a new hire $10 per hour
then the business is more likely to hire less workers and be less willing to
hire someone with such little experience. According to an article in USA Today,
about 1.5 million, or 53.6%, of bachelor's degree-holders under the age of 25
last year were jobless or underemployed. Raising the minimum wage would only increase
these figures. You have to let the market speak for itself. In any good
business, when the business becomes profitable and the workload too great, they
hire an additional worker to help. Raising minimum wage is a disincentive for
the business to hire, thus stretching its business with as few workers as possible.
Business growth is essential for the market and for the work force. The more
business is allowed to grow naturally, the more people it will employ.
As
mentioned earlier, the student loan debt is rapidly approaching $1 trillion. I understand
the need to ensure good paying jobs for the recent graduates, but raising the
minimum wage will not help this. If President Obama really wants to give
everyone a fair shot, then he has to lower the cost. I’d love to have minimum
wage start at $50 but basic supply and demand economics will not allow it.
Right now, we have a low supply of jobs available due to the high cost of
hiring in a slow economic recovery. Reduce the cost to hire an additional worker
and the unemployment rate will drop. However, what incentive is there for an
unemployed person to take a job believed to be slightly below their skill level
when the unemployment benefits from the government are so good?
When one
looks at minimum wage, unemployment, and student loans, they quickly realize
how interconnected the three categories are. Raising minimum wage increases
unemployment and student loan debt outstanding. Lowering minimum wage would
decrease unemployment and student loan debt outstanding. Although I’m not
advocating lowering the minimum wage, I believe that raising it would be
detrimental. In this recovery we need to let business do what it does best: be
profitable. Growth for business means growth for the people.
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