Why we should not raise minimum wage
The minimum wage debate is a hot topic – who wouldn’t want more money? In theory, it’s a no brainer to give people more money for the work they are doing. If it sounds too good to be true, that’s because it is.
People are so blinded with the concept of having more money that they are unable to see all the negative effects that raising the minimum wage would have.
The most popular argument against raising the minimum wage is that this action would cause an increase in the price of most everything.
ProCon.org recalls an article done by Federal Reserve Bank, that states that if “the minimum wage is increased, fast-food restaurants would pass on almost 100% of their increased labor costs on to consumers and that other firms may do the same.” It’s simple economics.
Let’s say that you have a minimum wage job and you spend about a hundred dollars each time you buy groceries. If you received more money from your job, you would be able to buy more groceries. Realistically, however, the grocery stores care a lot less about our happiness than making a profit.
If they see an increase in corn sales because of the minimum wage increase, they are going to increase their prices so they can make more money. You would get extra money to receive the same amount of groceries you would have gotten without a minimum wage increase. Furthermore, if the grocery store itself has to pay its employees more, they are inevitably going to raise the price of that corn to continue to make a profit.
Other than raising the prices, raising the minimum wage would do some harm to the way companies interact with their employees. Thebalancecareers.com claims that for “companies with a fixed compensation budget, an increase to the minimum wage could result in layoffs or slower hiring.”
For example, for a company that has 10 employees at the current minimum wage salary, that number prevents them from going over their budget. If an increase in the minimum wage was passed, this company would need to update their budget and may have to fire a couple of people to maintain their profit.
The site also claims that this increase would make employers “hire fewer workers in entry-level jobs, which might make it harder for workers to begin their careers.”
Since these entry-level jobs pay more, they become more competitive. With fewer people getting hired, entry-level jobs turn into who has the most experience.
On top of all of that, fewer jobs will be created if the wage is increased. According to Money Q and A, companies “will be forced to simply do without the additional help. Now one person will cost as much as two with a $15 minimum wage.” If the wage does get increased, companies will not even bother opening up extra job offers and one person will be doing the work of two, with the pay of one.
Other than raising prices for food and making jobs harder to find, raising wages can cause more people to drop out of school or not pursuing higher education.
According to an article in Vittana, “If a student knows that they’ll earn a specific income with or without a degree, it might make sense for them to drop out of school to pursue a job opportunity.”
Students who live in lower-income houses are at extreme risk. They also state that “Earning a degree of some type can create up to 40% more lifetime income, which is difficult to see sometimes when you’re staring at a fair minimum wage right in the face.” Students will begin to not even consider school as an option, they will skip the risk factor and go to what is guaranteed. However, an education can help an individual more.
Even though raising the wage sounds like an amazing concept, it isn’t without its flaws. Raising the wage would bring so many new problems in the workforce. When considering all of the cons of raising the wage, it is best to leave it where it is.