Although the wage issue deserves empathy, Democratic legislators must also consider the issue logically to avoid unforeseen consequences. Increasing the federal minimum wage will have negative effects on training opportunities, non-wage compensation, and labor competition.
An increase to the federal minimum wage adversely influences training opportunities for workers. Minimum wage affects a company’s willingness to take a risk in hiring untrained first time and low-skilled workers. According to a 2015 U.S. Bureau of Labor Statistics report, workers under the age of 25 account for “nearly half of those paid the federal minimum wage or less” ("Characteristics"). The nearly fifty percent minimum wage makeup is unsurprising since the …show more content…
Increasing the minimum wage will place a greater emphasis on the value of a worker as opposed to the cost of the worker. Increasing minimum wage lessens the price advantage that unskilled and low skilled workers need to compete in the job market (Perry). A lower-paid worker earning $7.25 an hour is more cost efficient compared to a more experienced higher-paid worker earning $11 per hour. However, the higher paid worker becomes a greater value as a $10.10 minimum wage reduces the cost efficiency of the low paid worker ("Effects on Employment"). An employer will see workers with more experience and education as offering a greater value for the wages paid out. Moreover, the hiring process will influence the competitiveness of workers. Businesses must pay an initial cost for advertising, interviewing, and vetting workers that will influence their hiring decisions. As the minimum wage increases, businesses will be more selective in the upfront hiring process to avoid losing the initial hiring costs on a risky worker. Naturally, companies may find it more cost effective to use their hiring power to interview higher skilled and educated workers ("Hiring New Employees"). An increase to minimum wage will leave many unskilled and low-skilled workers unable to make ends meet because their competitive disadvantages make them less valuable and cost efficient to