Minimum Wage

Jesse Parker

In 2009 the federal minimum wage was set at $7.25 per hour and has not changed since. It has become prevalent today that the federal minimum wage needs to increase substantially in hopes to decrease poverty–and to ensure a livable wage and a greater standard of living.

Many people argue that the federal minimum wage should be set at fifteen dollars per hour. There are several benefits to more than doubling the federal minimum wage and reasons why it should be raised.

However, there are also consequences our economy many potentially endure as well.

According to the Economic Policy Institute, “a fifteen dollar minimum wage would produce 107 billion dollars in greater wages for employees.”

Furthermore, an increase in earnings would result in an increase in spending, thus retail stores and other businesses would see an increase in revenue.

The wage increase would also lift many people above the poverty line and would allow them to have a better and more quality standard of living. Also, this elevated pay may persuade employees to stay with companies much longer.

With the current low wages, it is difficult for employers to encourage employees to be as productive as they can and show enthusiasm. This increase in pay could potentially fix these problems by incentivizing workers to give a better effort and
be more productive in their duties.

America is not what it used to be, in that in past few decades our economy has been doing great, “The economy has grown dramatically over the past 50 years, and workers are producing more from each hour of work, with productivity nearly doubling since the late 1960s.

If the minimum wage had been raised at the same pace as productivity growth since the late 1960s, it would be over $20 an hour today” (EPI, 2021).

With that being said, it sounds perfectly reasonable to raise the minimum wage. Yet, there are many downsides that come with it. While raising wages comes from a place of good intentions in hopes to increase the standard of living, opponents argue that creating such an increase in wages, businesses’ labor costs will surge which would likely result in them raising their prices which may cause an increase in inflation.

When prices rise, the cost of living increases, which would defeat the purpose of raising it in the first place by harming the people it was intended to help. Another argument
is that an increase in the minimum wage would actually decrease the number of jobs rather than create more.

With the cost of labor being a big part of business, employers may need to fire people in order to cut jobs so that they can keep making a profit. Also, this would have a major effect on small businesses.

Most small businesses do not usually make huge profits so by raising the minimum wage, they would need to increase prices which could cause customers to leave in order to find cheaper prices, which may result in them going out of business.

According to the Congressional Budget Office, “raising the minimum wage to $15 an hour by 2025 would result in the loss of approximately 1.3 million jobs.”

As for large corporations, it seems like they would still do fine since they have enormous budgets and so they should be able to manage to pay their employees a much greater wage.

Nevertheless, some people argue that the increase in wages will motivate employers of these large corporations to start investing in technology that would replace workers.

Although an increase in pay would benefit many, it would also produce negative consequences for others. Another argument against increasing the minimum wage is that it would decrease the hours employees are willing to provide employees.

For example, full-time employees may get their hours cut, making them part-time in order for employers to save money on employee benefits like insurance