As of January 1st, 2016, the minimum wage in California is 10 dollar per hour and throughout the year, the minimum wage increases by a few cents. Currently, the minimum wage increased to 10.30 per hour. What is minimum wage? Minimum wage is a standard limit meant to guarantee a fair wage for the lowest pay workers (EPI). Some might agree that raising the minimum wage will help improve the life of low-income family. On the other hand, some thinks the opposite. Not too long ago, people are proposing for a 15 dollar minimum wage by the year 2020, 4 years from now, in hope of improving poverty. Raising minimum wage can affect everyone in one way or another. However, raising the minimum wage will only do more harms than goods. Raising the minimum wage can affect the economic in different ways. In term of short-run, raising the minimum wage can improve the living conditions for some families, but at the same time, it does not. In the short run, the lives of lower-pay workers will improve since they now have money leftover for saving. Furthermore, the increase in minimum wage encourage workers to look for a job; therefore, it causes the demand to increase. With the demand for jobs increase, companies and firms need to provide more job opportunities. However, thinking in term of the long- run, the rate of unemployment will increase. Before, with the low minimum wage, there were plenty of jobs availables, but workers does not want to work a low pay job. Therefore, there was a large amount of available jobs, but there was not enough workers and that cause the graph of “Market for Labor” to have a shortage of workers. In addition, due to the raise in minimum wage, employers will also look for an alternative that will help them spend less money. With that, companies and firms will find substitutes that will help them earn the same or more profits; for example, machinery and technology. With the demand for jobs increase and with the low numbers of jobs available, the unemployment rate will increase and that will cause a surplus of workers. Every worker is hired for a reason.
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Those reason could be skills, talents, compensating differences, and or discrimination. It is all depends on the job. In term of different types of worker, each will be affected in their own way when the minimum wage is increase. For skilled and semi-skilled worker, they are similar, they are non-affected group because companies and firms are most likely to keep workers that are that are most beneficial to them. They does not need to be train and that help the firms to save times and that time will be use to produce more products. As for unskilled workers, they are most likely will be laid off because they are not beneficial to the firms. Since the minimum wage increases, firms are looking for an alternative to save money and that lead them to turn to machinery. In a bulletin by Joseph J. Sabia, associate professor of economics at San Diego State University, wrote for Cato Institute, he states that many firms respond to to the increase in minimum wages by replacing low-skilled labor with machinery (Sabia, 2014). Firms will laid off their unskilled workers and replace them with machinery that can produce double the amount a regular worker can produce in the same amount of time. Furthermore, ethnicity, race, and gender are also an important factors that determine the positions and or wages of that worker. In the article, “Issues and Tissues,” by Nicholas Schultheis, his data shows that the average income Caucasian is $67,175, Hispanic was $40,007 and African-American was $39,760 (Schultheis, 2014). Based on the data, the gap between Caucasian and African-American is excessive with the difference of $27415. Not to mention, most of the difficult jobs are done by the minorities. In different cities and different states, the increase in minimum wage can affect them differently. According to the article by James Sherk, “Raising Minimum Starting Wages to $15 per Hour Would Eliminate Seven Million Jobs”, he believes that a $15 minimum wage will affect states with lower cost of living, South Dakota, Arkansas, Mississippi, or Alabama, than states with higher cost of living, New york, Hawaii and California
Those reason could be skills, talents, compensating differences, and or discrimination. It is all depends on the job. In term of different types of worker, each will be affected in their own way when the minimum wage is increase. For skilled and semi-skilled worker, they are similar, they are non-affected group because companies and firms are most likely to keep workers that are that are most beneficial to them. They does not need to be train and that help the firms to save times and that time will be use to produce more products. As for unskilled workers, they are most likely will be laid off because they are not beneficial to the firms. Since the minimum wage increases, firms are looking for an alternative to save money and that lead them to turn to machinery. In a bulletin by Joseph J. Sabia, associate professor of economics at San Diego State University, wrote for Cato Institute, he states that many firms respond to to the increase in minimum wages by replacing low-skilled labor with machinery (Sabia, 2014). Firms will laid off their unskilled workers and replace them with machinery that can produce double the amount a regular worker can produce in the same amount of time. Furthermore, ethnicity, race, and gender are also an important factors that determine the positions and or wages of that worker. In the article, “Issues and Tissues,” by Nicholas Schultheis, his data shows that the average income Caucasian is $67,175, Hispanic was $40,007 and African-American was $39,760 (Schultheis, 2014). Based on the data, the gap between Caucasian and African-American is excessive with the difference of $27415. Not to mention, most of the difficult jobs are done by the minorities. In different cities and different states, the increase in minimum wage can affect them differently. According to the article by James Sherk, “Raising Minimum Starting Wages to $15 per Hour Would Eliminate Seven Million Jobs”, he believes that a $15 minimum wage will affect states with lower cost of living, South Dakota, Arkansas, Mississippi, or Alabama, than states with higher cost of living, New york, Hawaii and California