For many years there has been a rising issue about the minimum wage increase and its correlation on the effects it would have on our economy. This is definitely a problem with two opposing sides of the argument, there are those like myself who are against it because of the effects it would have on the cost of living, then there are those who are for it because it would somehow benefit our economy. Although I understand that raising minimum wage could benefit those living in poverty, I strongly believe that minimum wage shouldn’t be interpreted as a salary to live off of. While people think an increase in minimum wage can help advance our economy, many people do not consider the negative effects it could inflict on our economy and whom this increase would affect. 

There are many people whom are currently living off of minimum wage, but there are also many young adults and teenagers that are currently working for minimum wage. Young adults are the prime people who see raising minimum wage as a key advantage because it’s looked at as more money in their pockets without thinking about what else comes along with the increase. In a New York Times Article by Noem Shieber Raising Floor for Minimum Wage Pushes Economy Into the Unknown, she uses several statistics to show that of the people making minimum wage, 33% are 25 years old or younger.  Being from a California, a state with one of the highest costs of living I have seen first-hand how a $1.10 increase has already began to impact things like the cost of groceries or the prices of food at local restaurants. (find more to add and support this paragraph)

There has been a lot of disagreements in terms of employment reduction and its correlation with the minimum wage increase. Many people believe that it would have no impact on employment, but based on research conducted by several educated individuals it has been proven otherwise. A higher wage increase would cause an increase in unemployment because it would mean having the same amount of workers and having to pay each worker more money which would lead to a reduction of funds going into that business. In an article by the issues and controversies database Federal Minimum Wage: Is the federal minimum wage good for the economy? It states, “Opponents also contend that raising the minimum wage can force unskilled workers out of the marketplace by encouraging more experienced workers to compete with them for employment”.  Many of the workers on a minimum wage salary are workers whom don’t have a lot of experience, or don’t have a college education to try and move up the working latter. If more employers seek higher skilled and experienced workers in exchange for a higher salary, it would lead to more workers being unemployed and left in more poverty than what they were in living off of a $7.25 minimum wage salary. Not only does the minimum wage increase impact the employment rate, but it also poses a threat to businesses and production. 

The impact that raising minimum wage would have on businesses and production varies based on the type of business and the area. A major franchise like McDonalds who has the money to pay people more wouldn’t be as affected as a family owned business whose funds are more limited. The area in which a business is in has a lot to do with the increase as well as the employers in that business. Urban areas like New York City or Los Angeles can afford to have an increase because they are more populated/ tourist areas where there is constantly business rolling in. On the contrary of that businesses in more rural areas would be more difficult to maintain a business because there are less people coming in. Noem Shieber was a subway business owner in Albany, NY who was greatly affected by the increase. In her New York Times Article Raising Floor for Minimum Wage Pushes Economy Into the Unknown, she discusses how she cannot afford to have minimum wage increase because she would have to increase the price of her subway sandwiches, causing her clientele to go to another subway for cheaper sandwiches. Because of this many businesses would be forced to go out of business, leaving more people unemployed. 

Not only does the minimum wage hike have an effect on businesses and on employers, but it would lead to inflation all around the country. California has gradually raised their minimum wage in the past years and I have seen how prices on simple things, like a gallon of milk have increased or a plate of food at a local restaurant has increased by a dollar or two. Jeff D. Opdyke states in his article Raising the Minimum Wage, Raise the Cost of Living, “Either way, raising the minimum wage will have a noticeable and possibly dramatic impact on inflation in America – which will, ironically, negate some or all of the benefits of a wage increase for the lower-income earners Mr. Obama and the Dems thinks they’re helping”. I understand that people would be making more money, but in reality that money isn’t going towards their pockets its going towards higher priced goods, resulting in minimum wage employers being left in the same position they are in now. In cities like Los Angeles and New York where the cost of living is extremely high a five dollar salary increase isn’t going to balance out with the extreme living cost and the inflation that would gradually happen over the years. In Ben Casselman’s article, LA’s New Minimum Wage Isn’t Worth Anywhere Close To $15 he discusses how the minimum wage increased salaries are not even really worth that amount. For example, in his article he uses a chart to compare different cities and areas like Washington D.C. and New York where cost of living is high, and it proves how the minimum wage is really worth three dollars less than its increase not balancing out with living cost. In the contrary it also demonstrates how lower cost of living states like Texas and Tennessee, the minimum wage is actually worth a dollar or cents more, balancing out with the living cost. Inflation is bound to happen all around the country gradually over the years, but cities with higher cost of living will be the ones with a greater impact. 

There is a broad range of people in favor of raising minimum wage, according to the pew research center there is about 56% of people in favor of raising minimum wage. People in favor of minimum wage argue that it’ll alleviate poverty amongst people living off of minimum wage and reduce the amount of people we currently account in poverty. In Chad Stones article Raising the Minimum Wage Brings Many Benefits, he states “In particular, a minimum wage hike to $10.10 would raise average family incomes below the poverty line by 2.8 percent and cut the number of people living in poverty by 900,000”.  Supporters believe that this is going to help many families financially without taking in the thought of what effects this may have on each of individual. 

I can see how raising the minimum wage would help minimum wage workers rise above the poverty line, but that is only because they would be meeting a minimum annual salary. This analogy is not taking in account the idea of inflation or job losses. In Chad Stones article Raising the Minimum Wage Brings Many Benefits, he also states “In particular, CBO estimates that, when fully implemented, a boost to $10.10 would reduce total employment by 500,000 jobs in the second half of 2016, with a range of uncertainty of plus or minus 500,000 jobs around that estimate”.  This statement takes me back to my argument about the reduction of unemployment an increase would cause. Minimum wage workers are usually workers just starting out with hardly any higher education or experience. If employers are going to get rid of these not so skilled workers for more productive workers, most of these minimum wage workers would be included in that 500,000 job loss statistic. If most of these workers are ending up with no job after the increase, who is the increase really benefitting? 

 

 