Running head: PROFIT AND BENEFIT 1

Profit and Benefit

Charles Ku
Salt Lake Community College

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Abstract
Many individuals argue that our government should raise the minimum wage to
$10.10 per hour due to ever increasing living expenses. People may go in the wrong
direction to require more money in their pocket; once we raise the minimum wage, the
consequences may include higher living expenses and higher unemployment because
someone has to take the loss. Raising the wages of such a large portion of society's
population could be a huge impact to economy, and it is not truly fair to all workers.
Minimum Wage
When first starting work at Harmons, I worked extremely hard because I wanted
my boss to know that I was worthy of it. However, I did not get the promised raise. I
started thinking that how pay raise system works may be a big problem in the USA today.
According to human resource manager, a part-time employee's periodic raise is
based on working at least 960 hours or 9 months whichever comes first to get a
performance review, or I could ask a merit raise anytime. The Harmons store director
told me that they were not obligated to provide me with a pay raise, and that the company
was not violating federal law because their employees' wages are higher than $7.25 an
hour. I took time to read through the Harmons' associate handbook. I was surprised that
there was nothing written down in the book about pay raise policy except two sentences,
You will be evaluated for raises and promotions on the basis of your performance in
several areas. When determining whether raises shall be given, your manager will
schedule a time to discuss your evaluation with you (ASSOCIATE HAND BOOK,
2013, p.28). It was apparent that the policy was an invisible rule for employees, and my

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manager did not mention this at all. I cannot see any benefit to this policy because this
business doesnt have an authentic force to make it reward the hard worked employees.

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When we do not get the money we expect, some people may propose to an
increase in the minimum wage. Due to the current economic climate and high living
expenses nowadays, many individuals argue that our government should raise the
minimum wage to $10.10 per hour. Barbara Mantel (2014), a society of professionals
journalist, investigative reporter, and editor, states that U.S. taxpayers paid about $243
billion per year between 2007 and 2011 to provide low-income working families with
public aid such as Medicaid, food stamps, the Earned Income Tax Credit and Temporary
Assistance for Needy Families (TANF). In her report, she shows evidence from recent
statistics that workers in the US need higher wages to live. If low-income workers get
higher pay, which is what they deserve, our government could save tons on unnecessary
expenses. Adjusting our wages by considering living expenses may be a good standard
for minimum wage. As the report from Amela Karabegovic, a former Senior Economist
of the Fraser Institute, and Niels Veldhuis (2011), explains why minimum wage should
base on the area living expenses, wage levels is a powerful tool for poverty reduction
because they ensure that employees earn enough income to meet the basic needs of their
families. The Congressional Budget Office (2014) has shown that the majority of
workers would receive higher pay if the minimum wage was increased. But some jobs for
low-wage workers would probably be eliminated. Figure 1. Effects of a Minimum-Wage
Increase (Congressional Budget Office 2014).
According to the Department of Labor (DOL) (n.d.), it administers and enforces
more than 180 federal laws to help about 10 million employers and 125 million workers.
The Fair Labor Standards Act (FLSA) states that its department of Wage and Hour
Division (WHD) controls working standards for wages and overtime pay, however, pay

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raises to amounts above the Federal minimum wage are not required, and extra pay for
working weekends or nights, requirement for breaks or meal periods, and performance
evaluations and the definition for full-time employment or part-time employment are
generally a matter of agreement between an employer and employee. In other words,
employers can do whatever they want as long as they do not go against minimum wage
laws. The U.S. Department of Labor website combines all labor related federal laws that
set the standards regarding worker's rights; nonetheless, labor laws have too much
tolerance it seems not only for workers but also for employers. This website is a reference
for what laws we have right now. It is insane that we have more than 180 laws in labor
department but none of them involve a regular pay raise.
Discussion
The federal minimum wage is currently $7.25. I agree that it is pretty low, and
even though I can understand why many want an increase minimum wage, many
economists argue that this change will ruin our society. On the other hand, Emily Chong
(2013) shoots down this claim in the article Higher wages wont increase unemployment!
by stating that there is no evidence that shows minimum wage laws affect job
opportunities, They present current research from well-established organizations such as
the National Bureau of Economic Research that shows there are no negative employment
effects from minimum wage increases. However, when I looked into her referred
research Technical Appendix and References $10.50 U.S. Minimum Wage Petition (2013)
I found out that the study showed that increasing the minimum wage would result in an
increase in the cost of food, a price increase sufficient to cover half of this rise in costs
would amount to a 1.35% (2.7%/2). For a $4.00 Big Mac, a 1.35% increase equals about

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5 cents. When Businesss inflates prices, they may lose some of their consumers; if
profits decline, employers may begin reducing labor to save money. It seems to me that
many people try to claim some thought without knowledge and use misleading data.
Conclusion
If our government raises the minimum wage, the living expense may skyrocket
and working hours may be shorter. On the other hand, I understand that business owners
want to save money from labor costs. But they may not know that the more they cut the
more they lose; when they lose an employee and hire a new one, companies have to
spend money and time to train new workers. According to Hiring Right: A Practical
Guide by Susan Herman (1994) in the section The Hidden Costs of a New Hire, A full
80% of turnover costs tend to be hidden and largely over-looked by managersthe time
employees spend helping the new hire to reach peak efficiency is on average about 14%
of the workday of direct supervisors and 8% of the workday of direct workmates.
Keeping excellent employees in the company can save the money and time it takes to hire
and train new employees, and also they will help the businesses operate efficiently.
Besides all the benefit and profit. What if employers family work so hard in other
place and never get a raise? What makes the owners feel that it is okay to ignore hard
workers performance? Do they think people will always work hard for low pay? Dont
they know employees will work hard when their work is valued? I agree that increasing
the minimum wage is not the major thing we need today, but hard workers deserve higher
wages. Instead of raising the minimum wage, which would affect the entire national
economy, we should establish a system that ensures that all employees get a chance to get

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their performance review and a set standard for how much of a pay increase they get.
Because this is a long term program, the businesses can keep good workers by rewarding
them continuously and will save money from turnover costs.
However, if we want to keep business going, we should stop interfering the wages
because the market will determine itself. The problem is, we human try to be fair on
everything, and most of the time we dont see the issue; we decide to make a choice that
many people think is right, but for the entire society it doesnt seem good. Before I took
this class I have never known it is such a complicated problem to deal with economy and
humanity.

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References
ASSOCIATE HAND BOOK. (2013). Harmons. 28.
Congressional Budget Office. (2014, February 18). The Effects of a Minimum-Wage
Increase on Employment and Family Income. Retrieved from
http://cbo.gov/publication/44995
Chong E. (2013, Aug 10). Higher wages wont increase unemployment! Salon Media
Group. Retrieved from
http://www.salon.com/2013/08/10/increased_wages_wont_reduce_employment_p
artner/
Karabegovic, A., & Veldhuis N. (2011, Jan/Feb). The economic impact of living wage
policies. Fraser Forum, , 7+. Retrieved from http://sks.sirs.com
Mantel, B. (2014, January 24). Minimum wage. CQ Researcher, 24, 73-96. Retrieved
from http://library.cqpress.com/cqresearcher/
UFCW Local 1059. (n.d.) Union Contracts. Retrieved from
https://www.ufcw1059.com/site/index.php?
option=com_content&view=article&id=23&Itemid=31
U.S. Department of Labor. (n.d.). Summary of the Major Laws of the Department of
Labor. Retrieved from http://www.dol.gov/opa/aboutdol/lawsprog.htm
Wicks-Lim, J., & Pollin, R. Technical Appendix and References $10.50 U.S. Minimum
Wage Petition (2013, June 20). Political Economy Research Institute. Retrieved
from
http://www.peri.umass.edu/fileadmin/pdf/resources/Minimum_Wage_petition_we
bsite.pdf
Herman, S. (1994). Hiring Right: A Practical Guide Retrieved from
http://books.google.com/books?
id=jt970cjxhwsC&pg=PR15&dq=why+cost+of+new+hiring&hl=en&sa=X&ei=k
B5MU5WvMKemygHl84DIDw&ved=0CEQQ6AEwAA#v=onepage&q=why
%20cost%20of%20new%20hiring&f=false