Unemployment Rates
The unemployment rates of the region are another essential factor which has an impact on decisions to increase minimum wage rates. This relationship between unemployment and minimum wage increases is complex, can produce negative as well as positive effects on the economy of the region. Raising minimum wages increases an employer’s payroll, the costs of production and services, and gives him or her second thoughts about hiring new employees. These rising costs are then passed on to consumers, leading them to make fewer purchases which decrease production. As fewer services and goods are needed, fewer workers are required, which leads to reducing employment for both lower waged as well as higher wage employees (Congressional Budget Office (CBO), 2014, p. 11). Increases in minimum wage rates provide the most adverse effects for teenage workers, low-wage, unskilled, and entry level employees. These workers are more likely to be employed in occupations that pay the minimum wage rate, and increasing the wage rates by too great of an amount can prices these workers out of the labor market (CBO, 2014, p. 6).
Increasing the state’s minimum wage rates by a smaller amount such as $2 to $3 per hour over a few years would provide low-wage and unskilled employees with slightly higher wages and family income. Providing these workers with a larger consumer spending base, and will increase the region’s economy over time. This smaller amount spread over time would give employers an opportunity to absorb increased employee costs through other methods than employment reductions (CBO, 2014). Smaller amounts would also more advantageous because it will decrease long-term unemployment rates in the region. Reducing the time workers spend collecting unemployment from 26 weeks to five – nine weeks (Partridge, M. D. & Partridge, J. S., 1999). According to the CBO, increasing the minimum wage rate will have two principal effects on low-wage earners, the higher wages...