Thursday, February 15, 2007

Non-Scientific Evidence on Minimum Wage Effects

Here is some anecdotal evidence to support what we have discussed as the main effect of a minimum wage increase: New wage boost puts squeeze on teenage workers across Arizona

That's certainly not the case under the state's new minimum-wage law that went into effect last month. Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees.

Mark Messner, owner of Pepi's Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school. "I've had to go to some of my kids and say, 'Look, my payroll just increased 13 percent,' " he said. " 'Sorry, I don't have any hours for you.' "

Tom Kelly, owner of Mary Coyle Ol' Fashion Ice Cream Parlor in Phoenix, voted for the minimum-wage increase. But he said, "The new law has impacted us quite a bit." It added about $2,000 per month in expenses. The store, which employs mostly teen workers, has cut back on hours and has not replaced a couple of workers who quit.

(Source: Division of Labour)


Anonymous said...

While many people thought only positive effects would come as a result of the increase in minimum wage, a few negative things have happened as well. It will now be harder for teenagers to find work as not only the supply of workers will increase but the number of workers hired will also decrease. In my mind this is a bad thing because a job for a teenager does more than just pay for their gas money. It is important for teenagers to work to see what the work world is like adn to get some experience in how to handle a job. I think these are skills that every teen needs to learn and are more important than making more money.
- chris G

Anonymous said...

Besides teenagers, there are also very poor adults working at minimum wage who no doubt thought that this rise in wages would be a help to them; unfortunately, many workers have been laid off and little did they know that they'll have a harder time finding a new job as well. As much as those families need the extra money, the previous minimum wage is better than no job at all. Same goes for teenagers. Overall it seems like too many people are worse off than before.

Anonymous said...

I agree with chris in regards to the idea that teenagers need experience in jobs so that they will be somewhat prepared for later years of working. Yet more than likely, there are still many jobs out there that may not be as convenient but now pay more. These are jobs that might not be too attractive to teens, such as flipping burgers at McDonalds, but now that they pay more, teens might have more of an incentive to work. I think in the long run, the minimum wage increase will be beneficial in the long run because it will motivate teenagers who otherwise would stay at home and do nothing.
-Andreas W.

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