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THE ALGONQUIN HARBINGER

Raising minimum wage backfires on young, inexperienced workers

Abby Keene, Staff Writer

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Amazon purchased Whole Foods Market stores on August 28, 2017, and immediately things began to change, and not in a positive way. The goal for a higher minimum wage and a lower poverty rate backfired on the billion-dollar company.

According to “Hey Alexa, where are all the low prices?” written by Herb Weisbaum, Amazon originally promised customers lower prices and workers higher wages in Whole Foods stores. Amazon also promised it would not lay off any workers or replace them. The company also chose to increase the minimum wage for its workers to $15 an hour, which was exciting for Whole Foods employees around the country.

Everything seemed fine, until recently.

According to Michael Sainato of the British newspaper The Guardian, workers began noticing that their schedules went from their usual weekly hours, to being drastically reduced. A Whole Foods employee explained to Sainato, “‘[Part time] employee hours at their store were cut from an average of 30 to 21 hours a week’ and that full-time employees were ‘reduced from 37.5 hours to 34.5 hours.’”

Sainato also says that the store labor budget stayed similar, if not the same.

“We just have to work faster to meet the same goals in less time,” the employee said.

This is just one of the huge problems caused by raising the minimum wage. Some believe that by raising the minimum wage across our nation, workers can afford more and poverty rates will plummet, but that isn’t necessarily true.

The current federal minimum wage sits at $7.25, and was established in 2009. Over twenty five states have chose to raise their minimum wage higher than the federal number, including the District of Columbia, which as of July 1 2019, will be raised to $14.

“The Fight for 15” movement has been advocating for the federal minimum wage to be raised to $15 per hour, replacing the current $7 minimum wage. Fast food workers in New York City went on strike in 2012, and as of January 2019, five states have passed a $15 wage increase.

A study completed by economist David Neumark at The University of California at Irvine explains that the majority of research completed shows a higher minimum wage reduces employment for workers with low skills, while having little to no effect on poverty rates.  

Raising the federal minimum wage is expensive, and could end up ruining opportunities for young or inexperienced workers.

A 2012 analysis of the New York State minimum wage increase of just over a dollar per hour conducted by Joseph Sabia, Richard Burkhauser, and Benjamin Hansen and published on Forbes, concluded a “20.2 to 21.8 percent reduction in the employment of younger less-educated individuals.”

High cost of labor leads to high rates of unemployment, because hiring new workers is too costly for company owners.

Neumark’s study for UC Irvine also observed over 200 cases of minimum wage increase and found the only effects on employment to be negative. People were losing jobs, while others were making more money, widening the gap between the rich and the poor.

Instead of paying six workers a lower wage, companies would reluctantly terminate workers in order to afford to pay three workers the higher wage.

It is agreed upon by government officials and American citizens that in a well-developed, opportunity-filled nation, nobody should have to suffer living in poverty. Raising the minimum wage would only drive a larger gap between economic classes, and would not assist in completing this goal.

Instead, expand the Earned Income Tax Credit, which is based on a total income of a family, rather than one individual’s income. The EITC is a tax credit for low to middle class earners in the United States, it depends on the person’s income and the amount of children they are supporting.  Helping employees gain more experience and training while they are still young and low-skilled, will create better workers for future jobs.

The reason the federal minimum wage is so low, comes down to cost of living. The average household income in Massachusetts is $56,000 according to the Boston Globe, and to maintain the same life in Akron, Ohio, one would need to earn $39,000 per year. So raising the minimum wage in areas such as Ohio, just wouldn’t be practical. But, in places where cost of living is rising, the minimum wage should be raised to match.

In some states, a higher wage is required to live comfortably. The living wage  in Massachusetts is $2.96 per hour higher than the minimum wage, meaning in expensive areas like this, the wage needs to increase.

Why should the minimum wage have to be the same? The state should decide this based on what residents need to live comfortably, and some have. California, New York and Massachusetts among others all chose to raise the minimum wage to $12 in 2019, in order to help families live more comfortably in expensive areas.

Raising the federal minimum wage would actually do nothing but increase inflation, because the cost of things depends on where in the United States you are living. In some areas, a higher minimum wage is needed to maintain a good quality of life, but in others it is not practical.

New Hampshire has a wage equaling the federal minimum wage, and an unemployment rate of 2.5 percent , while in New York the minimum wage is $11.10, and the unemployment rate is at 4.5 percent. Though it’s hard to compare, because of differences between each respective state, this can be used as an example to condemn raising the minimum wage.

The whole idea is minimum wage is fine where it is federally, but should be changed by state based on the needs of workers. Amazon raising minimum wage for all workers at Whole Foods stores regardless of location ended up hurting workers in some areas, but helped in others. Leaving it up to the state and their cost of living  is much more beneficial than forcing states that cannot afford a higher wage to participate.

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Raising minimum wage backfires on young, inexperienced workers