In class, this week, we read “from Serving in Florida” by Barbara Ehrenreich who works undercover as a server to study the life of working poor with minimum wage and to live on the wages she received. Well, she finds out and describes to our readers that living on minimum or low wages is extremely difficult. The author herself works at two places to earn enough money so she can sufficiently eat and sleep without any luxury. But, when we think about the solution, we might all agree on the idea that the minimum wage should be increased so that the workers like Ehrenreich can enjoy a better standard of living.
But are we sure that this idea could make the lives of workers like Ehrenreich better? In September 2016, one-quarter of restaurant closures in the California Bay Area cited rising labor costs as one of the reasons for closing. This means that people working in these restaurants became jobless because the wages increased, and the restaurants couldn’t bear these costs of paying them.
In some restaurants, wage increase puts more money in the pocket of some, others with bearing costs of having their hours reduced and making them part-time. Higher labor costs render low-skilled workers, like teenagers who recently joined to work, unemployable as it removes their key competitive advantage—cost.
Milton Friedman, an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences, said, “Minimum Wages either do nothing or cause inflation and unemployment.” So, is it better to support the increase of minimum wage which leads to unemployment or let workers like Ehrenreich live with minimum wage so that low-skilled workers, who are poor, to have a job in the long run?
