Today, minimum wage is a far cry from its humble beginnings in 1938, with the Fair Labor Standards Act. That piece of legislation, put into law by President Franklin Roosevelt declared that minimum wage be set at $ 0.25 per hour for labor workers. Today, that rate is $ 7.25 per hour in most states, with others voluntarily raising the rate, since they feel it is due. The last time minimum wage was increased was the year 2009. However, this change will affect large and small businesses across the United States.
Essentially, it boils down to two issues for businesses: cost and inflation. Demand economists constantly postulate that raising minimum wage will lift unskilled workers out of poverty. However, there are holes in this theory, as discovered by a study conducted by the Heritage Foundation. Its findings concluded that only 15% of minimum wage earners would directly enjoy a positive impact through an increase in minimum wage.
How Businesses are Dealing with Minimum Wage Mandates
Whether or not the study holds true is irrelevant. Businesses deal with the realities of minimum wage increases every time they are raised, or proposed to be raised. Large and small businesses that are unable to absorb the higher cost of a wage increase will simply either reduce their workforce, or pass the higher employee cost on to the consumers. Most choose to do the latter, which inflates goods and services provided by those businesses. There is a reason for this. What is the reason?
Like it or not, labor is a commodity. It is not a right, mandate, or perk. During times of economic booms, labor prices go up as skilled workers and experienced management personnel command higher prices for their positions. Conversely, when the economy takes a turn south, skilled workers and experienced management personnel ultimately displace those who are unskilled or inexperienced. To the business owner, this is simply “discounted labor,” as they are able to pay fewer wages for better work provided by skilled and experienced employees. So while minimum wage may increase an employee’s paycheck, in the long-term, it does little to improve their situation because large and small businesses will always find a way to lessen the impact caused by the minimum wage increase.
Employees in the credit union industry tend to stay at the credit union and generally aren’t seen bouncing from job to job or industry to industry. Credit unions tend to take care of their employees. This job security is seen as employees greet members as they walk into a credit union, or fill out a loan application online. With time, credit union lending becomes more and more pleasant as the member is recognized and treated with respect. Whether the wage change is beneficial to the employee or employer, credit unions do show care all around.
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