Higher wages could mean fewer jobs

Print More

By Dimitri Babalis & Olivia Rubick
MI First Election

The 2016 presidential election could have a big impact on the minimum wages.

Raising it could have a ripple effect, increasing unemployment, which could depress investments and individuals’ economic statuses.

Throughout debates, candidates Hillary Clinton and Bernie Sanders have said they want to raise the nation’s minimum wage. Donald Trump has gone back and forth on the minimum wage and most recently said it should be decided by the states.

Michigan State University Business and entrepreneurship professor Kenneth Szymusiak praised what Barack Obama has been able to do in his two terms in office, but is uncertain about what the next president will bring.

Szymusiak said, “I think Obama has actually been pretty positive from a general business ownership standpoint.”

The nation now has one of its lowest unemployment rates in history at around five percent.

Szymusiak said he fears that a raise in minimum wage will reduce employment.

Szymusiak said, “I think raising the minimum wage, being a small-business owner myself, would be unaffordable. There is no way I would be able to afford to pay someone $15 an hour in the business I was running. It would be impossible.”

Szymusiak has owned a few businesses and assisted MSU students in kickstarting their own companies.

“If small companies start laying people off, then those people are going to have to start working for the Walmarts and the McDonalds companies that can afford it,” said Szymusiak.

John Crane, owner of several car dealerships, said he is paying close attention to each of the candidates’ views on the minimum wage.

Crane said, “Most of the Democratic candidates are suggesting that they believe that minimum wage should be raised. If that goes into effect after the election, it will have some impact on the way I run my companies.”

“There will be positions like secretaries, porters or cashiers that will need to be paid higher. Depending on the change in wage, I might have to cut down some job positions or shifts in order to pay everyone $15 an hour as opposed to $10 an hour,” Crane said.

“If the wages change and we do need to pay higher salaries, we could take the angle of searching for more qualified workers who would do their work twice as efficient as opposed to an entry level effort we might be getting instead,” Crane said.

Crane has been in the car business his entire adult life. He said that his workforce is constantly changing as jobs are being created and eliminated.

Don Potter, 45 of Allegan, Michigan, is unemployed and has faced some of those issues.

Potter said, “I have been unemployed for six months after getting released from my position at GM. My family is really struggling, and finding work is nearly impossible.”

Potter hopes that whomever is elected president next be able to raise the minimum wage. He said that he is rooting for Sanders and a main reason for that is his stance on wages.

“I have done job searches but the only places that are hiring are fast-food restaurants. As a 45-year-old, $8.50 an hour isn’t going to cut it for my family. This new increase in minimum wage is going to be beneficial for a lot of people. Yes, it makes me want to find a job even more, but with the increase in wage, there is going to be a decrease in positions so I see it as a lose-lose situation,” said Potter.

Restaurant owners are also seeing the possible raise in minimum wage having a negative correlation on their businesses.

Jeff Ryeson, owner of E.G. Nicks in Lapeer, Michigan, said, “I love being able to employ lots of high school and college kids during the year and especially summertime. A raise in minimum wage, especially a substantial one of $5, could really hurt my employees. I would obviously only be able to staff a limited number of people because, I mean, really you only need a couple hostesses and a small group of waiters/waitresses with flexible schedules to run a small restaurant.”

“I am not against a raise in minimum wage. There would just have to be some serious downsizing of my staff taking place, which is unfortunate. I like having lots of new people in here and being able to employ a lot of the teenage kids in need of jobs,” Ryeson said.

Michigan State economics professor Ronald Fisher said he doesn’t believe it will be that easy for the next president to change the minimum wage.

Fisher said, “The president can’t raise minimum wage by him or herself. Only Congress has that power.”

Fisher said, “They can just propose it. Congress has control by being able to veto it. If the elected president represents one party and the Congress represents another, they might not agree on changes in minimum wage and that’s when it becomes interesting. However, the next president should have a huge influence over what Congress will eventually agree on.”

Comments are closed.