Being right above minimum wage

Being at minimum wage is one thing, but being slightly above may in some ways be more frustrating. The reason; minimum wage can increase at the stroke of a pen and would be enforceable by law. It’s a guaranteed wage. It hurts the person right above minimum wage the most. With federal minimum wage at $7.25/hr, someone at $8.50/hr isn’t too far ahead. A $0.75 increase of the minimum wage cuts this difference in more than half. That raise was guaranteed for the minimum wage worker, but must be negotiated for the worker slightly above minimum wage. If that raise isn’t possible, the minimum wage worker has a purchasing power closer to the other worker. This is one of bad side-effects of raising minimum wage, the increase in the price of consumer staples. Consumer staples follow supply and demand like any other good, but these are goods needed by all. Those of wealth won’t back down at a 15% or even a 25% rise in the price of these items, as it represents a relatively small portion of their expenses. With a higher minimum wage, the price of consumer staples increases, not changing the amount of goods to be purchased by the minimum wage worker, but lowering the amount purchased by the worker slightly above minimum wage. If the cost of production remains the same, the purchasing power that disappears will be transferred to the business owners producing the consumer staples.

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

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