A Floor Price
A Floor Price
A hike to the federal minimum wage took effect in January 2007. Some states had already raised their minimum wage months before Congress acted, so this was old news to them. The rise in the cost of labor, however you slice it, will affect the business environment and the way companies make critical decisions in 2007 and beyond.
Wages for workers should naturally rise to match the upward slope induced by inflation, since it increases the cost of commodities and the prices that businesses charge.
You can be more or less inclined to see the minimum wage hike favorably depending on whether you're an employer or an employee. A spike in staff costs impacts a company's bottom line since it makes doing business more expensive.
Employers who pay their workers a living wage are only being competitive in the eyes of the employee. If you're in the business of making a living income and you also have relatives living below the poverty line, you can find yourself with a foot in both camps.
This increased pressure on salaries has the greatest impact on small enterprises. State or nationally required wage increases can put a significant strain on businesses that rely on low-skilled, low-wage workers to retain their staff.
Companies running on a tight budget often find that even a little shift in expenses can have a devastating effect on their ability to stay in business. Additionally, due to the highly competitive nature of the small business model, there is limited space to increase prices for clients or consumers without jeopardizing business with larger competitors that can easily absorb the minimum wage increase without doing the same.
From a governmental standpoint, Congress is hesitant to raise the minimum wage due in part to these issues. Companies that outsource production or support to countries with lower wages in order to boost their bottom line are already facing immense public animosity.
In order to access a workforce willing to work for less than the minimum wage, a company is prepared to move a large portion of its operations to a foreign country, which comes with its own set of expenses.
It is difficult to see how this trend of low-wage jobs leaving the country can be reversed from the worker's point of view. Legislation aimed at halting the export of employment is not widely supported because we are hesitant to prohibit companies from taking the necessary steps to remain competitive in the market.
Although it could alleviate workers' hardships, it contradicts our stance on allowing capitalism and the free market to operate. Tragically, even when free market forces are at work, some decent people get cut off from the program.
If American workers want to compete with low-skilled workers abroad, they should just quit becoming low-skilled. If they take advantage of educational possibilities and acquire valuable skills, they can break into a new market and find a high-paying job that isn't going anywhere since businesses value specialized workers.
Thus, the government should refrain from intentionally suppressing the market to impede free trade if it wants to combat the outmigration of jobs caused by high employment costs. The wisest course of action is to train and educate our workforce so that they can compete with and even surpass their foreign counterparts in terms of value and productivity.
This is the finest example of capitalism in action, and if this strategy is implemented, the result will be a more robust workforce, the preservation of American jobs, and a stronger national economy for all.
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