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  • Raising The Minimum Wage: Right Thing, But Backfiring

    America has too often made strong gains at the expense of emotional or ephemeral cuts which nullify that gain. We need balance so business can prosper and employees can work toward better lives.

    There is a debate about how the minimum wage is hurting students with summer jobs, as well as those, who work entry-level jobs. Because the federal government recently recommended a minimum wage increase to $8.25 an hour — more employers are not hiring. So, let me get this right: you are paid more, but there is no job to to collect the pay — interesting.

    The Right Thing: it’s necessary and morally appropriate to offer a living wage to any worker, even those working for the summer. Yet, we have to balance the higher costs with productivity and profit. I believe too often, the federal government doesn’t take into account, the lean margins that a small or mid-sized business contends with, yet what the federal government can do is incentivize hiring — through federal, state and city programs, which would increase the tax revenues they need: the same ones they are trying hard not to talk about.

    But Backfiring: businesses are reluctant to hire. Some businesses even took stimulus money with the incentive to hire and still didn’t hire, so businesses are always trying to ease its largest expenditure: people. America has too often made a strong gain, but at the expense of an emotional or ephemeral cut, which nullifies the gain, so we need to find “balance,” so business can prosper and employees can work toward better lives.

    What I learned is that the working poor and very poor, especially those within minority communities are hit hardest by this, so it removes another staple for them to help themselves up the ladder. The Wall Street Journal article, The Jobless Summer, illustrates the bleak details against young workers — I would say entry level workers as well.

    The The Jobless Summer states, “But Congress has also contributed by passing one of the most ill-timed minimum wage increases in history. One of the first acts of the gone-but-not-forgotten Nancy Pelosi ascendancy was to raise the minimum wage in stages to $7.25 an hour in 2009 from $5.15 in 2007. Even liberals ought to understand that raising the cost of hiring the young and unskilled while employers are slashing payrolls is loopy economics.”

    Governments at the federal, state and city level have to do a better job of both empowering businesses and making workers part of that process: right now: the government creates a saturated labor pool, where people are in competition for jobs beneath their skill-sets — jobs that will pay them one-fourth of what they might deserve: welcome to the new, new-economy — the “hustle economy.”

    Good Luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Career


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