Essay on the Negative Effects of Increasing the Minimum Wage in Oklahoma

The state of Oklahoma is known for mass production of oil. The disruption in the prices of oil has begun to take effect. It was reported that Oklahoma was amongst the four states to record a negative GDP growth in Q2 2015.The anulization fall of 2.4% was the worst ever to be recorded in the whole country. The increase in minimum wage will cause many negative adversities to many people and businesses in the Oklahoma state ("Minimum Wage" n. d.).

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Increased Unemployment

The current Governor of Oklahoma Mary Fallin, in trying to help with the situation, signed a bill which does not allow cities in the state of Oklahoma from establishing a minimum wage which is compulsory and employee benefits, which is inclusive of sick leave days or vacation (Ashtari, 2014). She claimed that most of the people who earn minimum wage are people who are young and who work at partly or at times simply seeking for entry level jobs. Hence, a mandatory minimum wage increment would force business owners to lay off these young workers the Congress Budget Officer stated that minimum wage rise from $7.25 to $10.10 could lead to loss of 500,000 job opportunities. Additionally, a survey conducted on 1,213 business people showed that 38% of them would fire employees if the minimum wage bill were raised to $10.10, and 54% said that they would lower the levels of hiring employees. By the end of the day, the many jobless people will suffer greatly due to this minimum wage raise not only in Oklahoma but American economy as a whole (American Legislative Exchange Council, 2014).

Modest Income Gains and Increased Poverty Levels

Poverty is another factor to consider here. The levels of poverty will increase when too many people become jobless. An increase in the minimum wage would ultimately harm and derail the local economy and businesses in Oklahoma in a matter of just a few months. Federal Reserve Bank of Cleveland study showed that an increase in minimum wage would see a cut in the hour's employees work for, hence a decline in the income earned (ProCon.org. 2016). The ultimate result of this effect is an upsurge in poverty levels (U.S. Department of Labor, 2014).

Closure of Low-Wage Paying Businesses

According to a 2013 Gallup poll, about 60% of the small business managers and owners say that a rise in the minimum wage would interfere with their businesses badly. This would force them to close down their businesses since they will not be able to pay all their staff the extra money and yet stand to make profits at the same time. Vice President of fast food chain White Castle, Jamie Richardson stated that his company would close down half of its stores if this bill is passed. Forbes on the other hand reported that the increased wage minimum is the reason as to why several Wal-Mart stores have closed down and that other business are shying from opening since they cannot keep up with the rates of the minimum wage. The response actions by businesses to the act of increasing the minimum wage will in turn increase unemployment and poverty, not mentioning other social crimes that come along when too many people become unemployed like theft and immorality.

Increase in Price of Consumer Goods

Higher wages translate to higher production cost, followed by higher goods price, then low demand o goods when the customers find it hard to purchase the high priced goods. Fast food restaurants pass almost 100% of all the production cost to their consumers due to increased production cost, according to a 2013 article by the Federal Reserve Bank of Chicago. The article also shows that the size and quantity of food stuff like a hamburger would be much smaller.

Due to the negative effects of wage increment stated above, the relevant authorities concerned should reconsider this bill. The adverse effects outweigh the benefits. The goal of poverty alleviation will not be achieved; people will become jobless and businesses closed down, thus generally making the survival of people of Oklahoma a nightmare.

References

BIBLIOGRAPHY "Minimum Wage. (n.d.). Retrieved 11 17, 2016, from Research Starters eNotes.com, Inc. eNotes.com : https://www.enotes.com/research-starters/minimum-wage

American Legislative Exchange Council. (2014, 3). The Effects Of Raising The Minimum Wage. Arlington, VA, USA. Retrieved 11 17, 2016, from www.alec.org

Ashtari, S. (Ed.). (2014, 4 15). Mary Fallin Signs Ban on Minimum Wage. Retrieved 11 20, 2016, from The Huffington Post: http://www.huffingtonpost.com/2014/04/15/oklahoma-minimum-wage_n_5152496.html

ProCon.org. (2016, 3 31). "Should the Federal Minimum Wage Be Increased?". Retrieved 11 20, 2016, from ProCon.org: http://minimum-wage.procon.org/view.resource.php?resourceID=006456

U.S. Department of Labor. (2014, 12). Wage and Hour Division. Retrieved 11 17, 2016, from U.S. Department of Labor: https://www.dol.gov/whd/state/stateminwagehis.htm