Question of the Month: Would an Increase in Minimum Wage Affect Your Hiring Strategies?

President Obama, along with Senate Democrats, have been making their case for a minimum-wage increase from the current $7.25 an hour to $10.10 an hour. If the wage hike goes into effect, it is expected to boost the earnings of about 16.5 million American workers. However, the Congressional Budget Office released a report showing an increase in minimum wage could lead to a reduction in total employment of .3%, or about 500,000 workers.

For our March Question of the Month, we want to know:

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9 Responses to Question of the Month: Would an Increase in Minimum Wage Affect Your Hiring Strategies?

  1. Karl March 4, 2014 at 8:24 am #

    A basic supply / demand curve drawn for labor price / quantity (see any econ 101 textbook) indicates that price fixing will cause a surplus of labor, aka unemployment, for all those people who are unable to market their skills above the mandated minimum. Obviously price elasticity is a factor, but only goes so far.

    **This means low-skilled workers will be more unemployable** than our government has already made them (thanks to misdirected public schooling & previously mandated minimum wages).

    The purported goal of their wage increase, to help poor people, is the exact opposite of what will really happen.

    • Terry Hemphill March 4, 2014 at 3:05 pm #

      Very well said Karl. Nobody points out that if raising the minimum wage really works, then why not raise it to $100 per hour? Or $2,000 per hour, and make everybody rich?

      • Robert March 18, 2014 at 1:44 pm #

        If we were all rich. Who would work? You? Everyone else would be on white sandy beaches drinking exotic drinks…..

    • Sarah March 18, 2014 at 11:43 am #

      And do they also realize that less employed people means less tax money coming in?

  2. kieran mohammed March 18, 2014 at 11:23 am #

    Raising the minimum wage should not impact hiring strategy but should promote a bit of re-engineering and value added processes. I think that this approach will do a lot of things for small businesses and the economy especially. For one , back as an Operations Manager in NY I sadly ran into many capable young people who thought that it was more incentive to stay on welfare than to go out and work for minimum wage- this may improve that look on life . Also traditional business operations concepts needed a good kick and this would definitely allow entry level staff to take on a more diverse role promoting more output per dollar. The idea is to boost economy by giving people more to spend – fine. But what is means for business is that it is time for a shake up on traditional approaches. A tough sell – I have been in small business operations consulting whereby I assist small business that are struggling and many do not openly accept the fact that they need help or need to change. Rather they look at the upfront costs rather than the strategic outcomes.

  3. Sarah March 18, 2014 at 11:41 am #

    The problem I already see coming is with current employees who already went to school,worked their way into their profession, and give it their all. If this goes into affect, they will only be a few dollars more than minimum wage. What does that do to their motivation?! Why would anyone want to put forth so much effort when they can go work at McDonald’s for just a few dollars less? Now all of my employees are going to want raises to keep above the poverty line. If we all make the same amount of money regardless of what we do or the effort we put in, no one will be motivated to do more than the absolute minimum.

    I think you will see a lot more under the table activity too.

    • Jill March 18, 2014 at 12:35 pm #

      Having worked fast food and ‘white collar’ well paying jobs, you work a lot harder at fast food.
      The real problem is that raising the minimum wage to this level is going to cause inflation, and everyone well actually have less as their buying power shrinks. I once had a young pair of workers, that I found giggling in the warehouse. When I asked them what was going on, they said that they were just imagining their raises. What raises I asked? Minimum wage is going up they replied. My response was yes, but since no one that worked for the company made minimum wage, and no one made less than what it was going to be raised to, there would be no raises. However, I cautioned them they should watch how much the cost of their lunches went up, as they tended to eat at the local McD’s. While the local McD’s also did not pay minimum wage, the cost of goods sold went up, driving the price of an average lunch up by about $1.

    • Robert March 18, 2014 at 1:38 pm #

      Raising minimum wage will be an advantage to our country. The disadvantaged, the
      underprivileged, and those who are less fortunate than us still deserve to make a living.
      Our current minimum wage is not even close to getting anywhere, let alone getting ahead in life.

  4. Bill Best March 18, 2014 at 12:03 pm #

    Although many in the survey say that the increase in minimum wage would not influence their hiring, I can only assume that they are paying above the proposed increase.. What they are not considering is that when the minimum is increased, higher paid (skilled) employees feel they deserve a proportional increase to offset the pay scale balance (justified or not). This many not always be an immediate reaction, but the result of the loss of buying power from increased pricing influenced by the rise of the labor cost will eventually be felt. Once that occurs then Skilled labor moral declines, people change jobs seeking better pay or begin asking for pay increases. Then all price of goods rise and the minimum wage earner is right back where he/she started.

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