AZ Proposition 206: Minimum Wage

AZ Proposition 206: Minimum Wage

Arizona is proposing Proposition 206, one that raises the state minimum wage to $10 in 2017, $12 by 2020, and by forcing employers to allow paid sick leave for their employees. This proposition is very common for states, one that has been a constant fight, and one that many voters have a lack of knowledge of the consequences of a yes vote. Minimum wage is a classic argument among conservatives and liberals, and it is also one of the few issues that actually affects an American’s day to day life. The current federal minimum wage is $7.25, and in Arizona it is $8.05 to adjust with the cost of living. Adding almost $4 to that is huge, raising it by about 50%. $12 an hour is a high wage, especially for unskilled hourly work. Some people have even gone as far as asking for a $15 federal minimum wage, as seen in the “Fight for 15” recently.
Any minimum wage is detrimental to small businesses, forcing them to pay more for unskilled labor, and sometimes even forcing them to shut down due to their rising costs. Minimum wage also pushes people out of the workforce, making them permanently unemployed. While liberals claim to do the compassionate thing by paying workers more, but the higher the price for unskilled work, the more people pushed out of the workforce because they simply aren’t worth that much. This is unfortunate because it pushes the people out that need the job the most, because they are the lowest skilled and therefore worth the lowest hour by hour wage. Despite what liberals think, the most compassionate legislation that could be passed on this issue would be to abolish the minimum wage as a whole, because then everyone could work for the price they are worth and not be pushed out by huge minimum wages.
Minimum wages also provide a false sense of gaining more money. It appears that one would be earning more money hourly, but the unseen action is that businesses then have to raise their costs, bringing the wage increase to the same marginal state that it had previously been in. This makes it seem like one is making more money, but in reality everyone is making more money, but also paying more money, so it’s the same ratio just higher in value. To be fair, this is not as big of a phenomena as it appears, since not all workers are hourly and affected by minimum wage. Despite that, this is happening, based on the market equilibrium. When minimum wage is set above the equilibrium, unemployment is created and prices will have to adjust accordingly. This means that businesses will have to raise their prices to adjust to the new, unanticipated costs, making the minimum wage increase virtually irrelevant.
A common consequence to minimum wage increases that has been seen is automated workers. In many fast food restaurants, for example McDonald's, will be forced to have self-service kiosks to cut down on the labor cost. In 2011, McDonald’s introduced 7,000 kiosks to help with the labor cost, since more McDonald’s are independent franchises, and the average profit on those after food cost is about $0.06 on every dollar. Independently owned franchises must be very aware of labor costs, and are therefore very price sensitive. This means they are more likely to take action whenever prices rise, especially when it is 50% or more of an increase. While minimum wage increases appear to be compassionate, they make business very difficult for a local business owner, and they could essentially ruin that person’s career.
Minimum wage is a classic debate among Democrats and Republicans, and unfortunately the liberal side takes an emotional stance that is not doing people in need any favors. Minimum wage increases unemployment, and gives off the assumption that people are earning more money, even though it adjusts to equilibrium. Many factors make a minimum wage increase bad for businesses and for people, and hopefully Arizona voters will see the cost to Arizona businesses and small business owners, as well as workers. Prop 206 could be detrimental to Arizona, and a no vote is a vote for small businesses and for workers.
Follow this author on Twitter @shannadnelson

New Jersey Ballot Measures

New Jersey Ballot Measures

Arizona Prop 205 Bad for Businesses and Safety

Arizona Prop 205 Bad for Businesses and Safety