The minimum wage went up to $5.85 yesterday, a current $0.70 increase in the ultimate $2.10 increase thanks to Bush signing the Fair Minimum Wage Act of 2007. 
 
I know I’m probably hurting the feelings of both high school dropouts and high school students who need an after school job, but I do not see the benefits of raising the minimum wage.
 
The main reason I don’t appreciate the minimum wage raise is there will be an increase in unemployment.  Some companies can’t afford to pay their workers more than the minimum wage, and the only way to make up for the forceed pay increase would be to lay off other workers to balance out the wage spendings. 
 
Let’s have some fun with math: 
 
One hundred people work for a company for 40 hours per week. 
 
        100 x 40 = 4000 hours of work per week
 
If they’re paid the minimum wage, the company dishes out $20,600 each week to pay those employees.
 
        4000 x $5.15 = $20,600 per week
 
So every year, that company has to pay their employees $1,030,000 for their work at the company.
 
        $20,600 x 50 weeks per year = $1,030,000 in wages paid per year
 
Now, say for example, that same company starts paying those same 100 workers the new minimum wage, $5.85 per hour.
 
        4000 hours of work per week x $5.85 = $23,400 per week
 
        $23,400 x 50 weeks per year = $1,170,000 in wages paid per year
 
The company is forced to cough up an extra $140,000 per year.  
 
        $1,170,000 - $1,030,000 = $140,000 difference in wages per year
 
What if the company says to itself, “well we don’t have an extra $140,000 a year to pay everybody….we’ve only budgeted $1,030,000 for wages.”?
 
The answer to that is to cut 12% of your staff:  for the 100 employees, that’s 12 people.
 
        88 workers x $5.85 per hour x 40 hours per week x 50 weeks per year = $1,029,600 wages paid per year.
 
Where’s the 12% going to go for another job?  If everyone has to cut back, unemployment will be through the roof!  Not only that, but the remaining 88 people in our example have to do the work meant for 100 --- in the same 40 hours per week, how fun for them!!!
 
What’s worse?  When the minimum wage is $7.25 per hour, the company would have to lay off 20% of the remaining staff getting paid $5.85 in order to maintain the same original wage budget, bringing the total work force down to 71% from the beginning:
 
        71 workers x $7.25 per hour x 40 hours per week x 50 weeks per year = $1,029,500 wages paid per year
 
If that company wants to stay within its original wage budget of $1,030,000, they’ll have to have 71 employees doing the work meant for 100.
 
Trust me, I’m trying to think realistically – if we’re talking about a company with 100 employees then that’s a small company.  Plus, I understand that one way to make up for the extra money paid in wages would be to inflate prices of your product.  This is happening every day.  But bear in mind it’s a lot harder for a small business to raise its prices and still stay in competition with your local Walmart, Target, etc.
 
Not only would companies to turn having a smaller staff and making less people do more work, the idea of a minimum wage increase at the present time is not necessary.  When I was 14, I got a job at my local Burger King in Pittsburgh.  The minimum wage at the time was $5.15.  They offered me $5.25, above the minimum wage with absolutely no prior work experience, and I also work my way up to $6.00 per hour very fast.  It is extremely rare these days (well I should say the days before yesterday) to find a company that will only start off paying the minimum wage or close to it (unless you’re interning…lucky me).  A lot of people are already getting paid well over the minimum wage, so increasing it would mean nothing to those at the top of the pay scale.  And the majority of people at the bottom are normally younger with limited job experience and educational background.  Should we reward these people and motivate them to stay at the bottom of the pay scale by increasing the bottom dollar?  And by eliminating the lowest pay category, you’ve just bumped everyone a notch lower too. 
 
I used to think I was rolling in the dough as a teenager in high school making $6.50 at a Sears store….but when Pennsylvania raised its minimum wage to 6.25, I felt like equivalent to a homeless person making no money – I was building a reputation with a company, had job experience under my belt, but barely clearing minimum wage?  I was insulted…

Let me end this rant with a finally issue the raising the minimum wage will inflame – more illegal workers getting jobs.  Everyone that is for raising the minimum wage has to stop complaining about illegal workers “stealing our lower class jobs” because the federal government is making it too easy, too tempting, and too necessary for companies to pay a motivated illegal under the table five bucks an hour than paying a snot-nosed teenager seven for the same job.
 
Wage increases: friend or foe?

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