Memorandum

TO: Nesta R. Marley, Executive Vice President Greasyburger Corp.

FROM: David Phelps and Kianna Weaver, Labor Research Analysts
DATE: February 5, 2014
SUBJECT: Negative Effects of Minimum Wage Increase

Labor research and analysis has shown that raising the minimum wage would have a
negative effect at every level.

The Worker

Studies have shown that raising the minimum wage would have little to no
effect on reducing poverty (Burkhauser).
A reduction in the amount of low-skilled, low-wage, jobs would leave many
current minimum wage earners unemployed (A Confusion of Economists).
Prospective workers that cannot find a job at minimum wage are not allowed to
work for less money (Samuelson).
May reduce the perks, benefits, vacation, and overall job training of current
employees (Neumark, Wascher).
20.9 percent of minimum wage workers who lived in poor families only
received 16.8 percent of the benefits (Burkhauser).
Workers willing to receive a cut in pay in order to learn a valuable trade or skill
will not be allowed the opportunity (Williams).
Sustained lack of unemployment for low-skilled workers has often resulted in
an increased propensity for criminal behavior.
Roughly 60% of those considered living in poverty dont work and are not
looking for work (Why Raising the Minimum Wage Kills Jobs).

The Employer

The increase in labor costs would be partially displaced to consumers, affecting
bottom line sales. (Burkhauser)
Businesses would have to scale back on their personnel, be more selective of
their hiring, and renew focus on efficiency and cutbacks (Neumark, Wascher).
As employers seek to be more efficient another wave of job extinction such as
that which eliminated movie ushers, gas station attendants, fast food help, and
variety of other minimum wage jobs will occur (Williams).
Workforce discontentment due to scaling back of benefits would lead to low
productivity (Burkhauser).
Small businesses could no longer afford to continue operating (Burkhauser).
All efforts at expansion would be severely hindered due to a lack of previously
available funding.

The Government

The loss of low-wage jobs will force potential productive members of society
to rely on government aide. This influx of new claimants will cause scale-backs
on other much needed programs (Neumark, Adams).
Government job training programs that teach basic skills become useless
because employers will hire less low-skilled workers (Neumark, Adams).
Forceful redistribution of wealth has never worked.
A dramatic increase in the unemployed resulting from an increased minimum
wage could lead the country into a recession (Neumark, Adams).

Discussion

But, arent we being greedy as a corporation by not sharing our increasing wealth
directly with our workers?

FALSE. By using our increased wealth to expand the breadth of our business, we
are creating new jobs, which is much more beneficial to the working class as a
whole.

Doesnt increasing the amount that consumers can spend on our products help
improve the economy as a whole thus improving our bottom line earnings?

FALSE. Minimum wage hikes have immediately preceded large spikes in
unemployment and recession as shown in the graph in attachment 2. It is also a
leading indicator of corporate bankruptcies.

Conclusion

Our recommendation is that you take immediate action to help safeguard against items
directly pertaining to Greasyburger Corp. i.e. the items listed under The Employer. Of
secondary concern is a plan of action against the remaining intermediate concerns that
will have an indirect or unforseen effect on your bottom line earnings.


Sincerely,


David Phelps
Labor Research Analyst


Kianna Weaver
Labor Research Analyst



Attachments (3): Works Cited; 4-Week Moving Average of Initial Claims; Federal
Minimum Wage Rates.



Black dots representing minimum wage increases from attachment 3.
Increases occur primarily before a spike in unemployment and are indicative
of a possible forthcoming recession.
















Attachment 1
Works Cited

Adams, Scott and Neumark David, Do Living Wage Ordinances Reduce Urban
Poverty? NBER Working Paper no. 7606, National Beureau of Economic Research,
Cambridge, Mass., (2000)

Burkhauser, Richard V., Written testimony before the Committee on Education and the
Workforce, U.S. House of Representatives, 106
th
Congress, April 27, 1999.

Burkhauser, Richard V., Couch, Kenneth A., and Glenn, Andrew J. Public Policies for
the Working Poor: The Earned Income Tax Credit Versus Minimum Wage Legislation,
Research in Labor Economics 15 (1996): 65-109

Burkhauser, Richard V., Couch, Kenneth A., and Wittenburg, David C. Who Gets What
from Minimum Wage Hikes A Re-estimation of Card and Kruegers Distributional
Analysis in Myth and Measurement: The New Economics of the Minimum Wage,
Industrial and Labor Relations Review 49(1996)

Neumark , David, How Living Wages Affect Low-Wage Workers and Low Income
Families(San Francisco: Public Policy Institute of California, 2002)

Samuelson, Paul. Economics, 9
th
ed. New York: McGraw-Hill, 1973.pp.393-394

Williams, Walter. Government Sanctioned Restraints that Reduce Economic
Opportunities for Minorities. Policy Review, No. 2 (I 977). p. 11, (Quoted in Poverty
and Wealth: The Christian Debate Over Capitalism, by Ronald H. Nash. [Westchester.
Illinois: Crossway Books, 1986], p, 122.)








Attachment 2