Wednesday, March 22, 2017

Student reaction to minimum wage issue

In this reaction essay the student considered some of the issues surrounding the minimum wage, and also applied the issue to her own work experience at a local hotel. 

  In class, we have been discussing many different topics already, but one really stood out to me. On the week one schedule, there were a list of different videos that we should watch on I watched a few and then I got to the one that really sparked my interest. "How the Minimum Wage Hurts Young People" which was not on the list, but it came up as a suggestion while watching the others. This video talked about the brutal reality of how the system works. This caught my attention because it actually applies to me. 

   First off, the video starts with an example. It talks about if you owned a nice piece of land and needed the grass cut, who would you pick? Since cutting grass does not require much skill, you would probably chose the person who is willing to do it for the cheapest, which works out until...the government gets involved. If the government got involved and created a law saying you have to pay 40 percent more than you have been, things would change. Since you have to pay more, you are going to want someone skilled in cutting grass, not just a young person in the neighborhood. Everyone wants more when it comes to spending more. According to the Bureau of Labor Statistics, people ages 16-19 had an unemployment rate of 15% in January 2017, while people at the ages of 45-54 had the rate of 3.3%. 

   As stated above, this subject personally matters to me. I work at a hotel here in Springfield, and we are going through this change right now. I work at the front desk and there is a front office manager, assistant manager, two full time employees, me (I work only one or two days on the weekend), and two night auditors. This is crazy if you think about it. There are 3 shifts at 8 hours each. There is no room for call offs, etc. but there is no money to hire anymore people. My manager has interviewed a lot of people throughout my time there, but maybe hired 2 or 3 and do not keep them for a long time. In addition to not being able to hire more workers, some periods of time hours get cut MAJORLY. During Christmas Break, I was lucky to get 8 hours each week, but luckily I got hours from our sister hotel, who coincidentally, was in the hiring process, and short on staff. Less revenue for the hotel means less money for the workers, no matter what age.

   I am very lucky because I am not working to survive, but if someone had my job and was trying to actually pay bills and live off of it, there would be no way to. People my age feel this "phase" that workplaces are going through because we have no experience yet and they want what they pay for, since they only have a little bit of money to spend on workers. It makes sense, but I wish our economy was not so bad that it had to be like this. I can see why a lot of people are in poverty. 

To wrap thing up, I just want to list a few pro and cons to this technique. 

Pros: employers will get more for their money, skilled people will produce quality work

Cons: Unemployment rate for younger people will increase, more poverty, more assistance from the government will be needed, no opportunity for skill training, more work for employers when someone quits, passes away, etc. 

When you say, “this technique” I suppose you mean the practice of having the government set a minimum wage.  Setting a floor to wages runs into a problem because the economy (or, more precisely, people who are in charge of setting up systems of creating and selling goods or services) sometimes require work that is so trivial or marginal that the person who does that work does not “earn” for their employer enough to cover the minimum wage. In this case, employers are forced by the minimum wage to “over-pay” their unskilled employees doing the fairly unproductive work. The employer could simply decide not to hire someone, or they could alter the job role so that the employee did “add value” at a rate matching or exceeding the minimum wage.  

Actual empirical studies of what happens when a government makes modest increases in the minimum wage suggest that the loss of jobs for unskilled workers is real, but not especially large.  For one thing, the increase in wages among the low-paid workers stimulates demand, as those workers spend their newly increased wages, and this increase in demand largely offsets the decline in employment.  Another argument is that increases in the minimum wages will force employers to increase the cost of their goods or services to cover the increases in labor costs.  This is also measured, and is real, but is of trivial significance.  The inflation in goods and services that follows a modest increase in the minimum wage in the actual world (as opposed to theoretical models), is tiny.  A comparison of the gains in human welfare from the increased wages provided to low-wage workers against the costs in terms of higher unemployment for unskilled and young workers and inflation suggests that, from a utilitarian moral perspective, modest increases in minimum wages provide far more benefits than harms, and are a net good.

You describe working at a local motel where there only eight employees, and you seem to be concerned that the motel really needs more staff, but the motel owner cannot afford to hire more, which leaves the employees overworked.  And yet, you also mention that hours are drastically reduced at certain times of year.  My own business experience is in farming, which also works a bit like the travel industry: there are times of the year when we need more workers and everyone works longer hours (holiday weekends, summer vacation, or times when the General Assembly is in session for motels in a state capital, and during harvest on a farm), and there are slack periods where fewer workers are needed, and those who are working get fewer hours (Christmas Break for motels, December through February on the farm). The economy generates some sorts of work like this where labor is seasonal, and employers would like to be able to quickly hire more persons, or lay off persons when work is slack (e.g., fireworks display operators work very long hours for a few weeks around the Fourth of July, but don't need to work much at all for the rest of the year).  I'm not sure in what way that connects to the minimum wage, however. 

I am not clear on how you are relating this observation about working hours to the minimum wage. If the minimum wage was lower, perhaps the motel would hire hire more staff, and that would reduce the work burden on all staff, but the newly hired workers would be paid less (since the minimum wage would be reduced). It may be a good thing that people are able to work for $6 or $7 per hour, since having a job is better than no job, and the work burden on everyone is lighter with more employees, but it may be a bad thing if workers can be hired for $6 or $7 per hour, if “living wages” are about twice that, and with a higher minimum wage workers would earn $8.5 or $9 per hour instead of $6 or $7.  

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