Against Increasing the Minimum Wage

Against Increasing the Minimum Wage

There are various reasons why raising the minimum wage to $15.00/hour would be troublesome to our nation’s economy and workers.  These 2 major reasons I will address include an overall loss of job and an increase in consumer prices

A raised minimum wage would force companies to cut back on the number of their employees in order to combat the higher employee wages.  There have been multiple studies done on how a minimum wage increase would affect unemployment, and most of them show an increase.  According to the Congressional Budget Office, a wage increase to just $10.10 would result in about 500,000 jobs to be cut (Trugman, 2015)  The former head of the CBO, Douglas Holtz-Eakin, has estimate that a minimum wage hike to $15 would end up costing the US 6.6 million jobs nationwide (Trugman, 2015). An example of this can already be seen in the fast-food giant McDonald’s.  After being pressured to raise employee wages, McDonald’s has now begun introducing automated kiosks within various locations to take customer orders (Herman, 2015). While this has only begun in moderation within the US, McDonald’s recently introduced 6,000 kiosks across Europe, essentially replacing 6,000 possible workers (Kooser, 2011).  This effect can also be seen in Seattle, where restaurants jobs across the city decreased by 0.52% in 2015, while these same type jobs increased statewide in Washington by 6.6% (Perry, 2015).  This decrease took place with a current minimum wage of $11, with plans to be raised to $15 by 2017 (Perry, 2015).One could expect to see if more job cuts as companies continue to look for ways to combat increased labor costs.

Another way for companies to combat labor costs would be to raise prices on goods/services.  Businesses have already reported plans to increase product prices with expected increase in labor costs due to new minimum wage standards.  For example, Jack in The Box has planned to increase their menu prices; either by 1.4% in California alone or by about 1% total nationwide (Wong, 2014).  Restaurants such as The Cheesecake Factory as well As Denny’s have also raised prices in California in 2015 to combat current and expected wage increases.    Those effected most would be those living in poverty already.  Only about 25% of those living in poverty are full time minimum wage employees (Richarson, 2015). Thus, the wage increase would not increase their income, but rather increase the amount they need to spend on consumer goods such as food and other essentials. This is just a few of the many examples of how a proposed increase in a national minimum wage would raise inflation nationwide.

Increasing the Minimum Wage

Despite these reasons, there have also been multiple reasons given for why a $15 minimum wage would be beneficial to our nation.  These reasons they I will discuss include the reduction of income inequality and also the saving of government money.

A raise in the minimum wage to $15 would help to bridge the gap in income equality.  Currently, about 42% of the United States workforce makes under $15/hour (Zillman, 2015).  According to current population survey data, 46% of workers living in poverty make an hourly wage above $10.10, and 36% of those living in poverty make greater than $12/hour (Neumark, 2015). These statistics go to show that even an increase from the current national minimum wage of $7.25 would still not help a vast majority of families living in poverty.  A hike to $15 would help to level the income playing field in our nation.