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JSM
JSM
Sept. 2, 2020, 6 a.m.


Increasing The Minimum Wage Would Hurt America. Here's Why.


Short Link: http://www.jsmtech.org/increasing-minimum-wage-bad
Read Time: 5 min


Over the summer, I took Econ 101 at the community college. As I am once more getting ready for a fun semester, I discovered some of my writing on the topic, which got me interested in it again. Here’s a brain dump on the subject, I hope you find it helpful!

 

Beneficial or Hurtful?

 

There are two camps that hold hearty beliefs about minimum wage. The first camp argues that increasing minimum wage will hurt the economy because empolyers will have to fire people to cut costs. The second camp argues that increassing minimum wage will benifit the economy because people will be able to spend more money on goods, thus offsetting additinoal costs to companies. I’ll list evidence for both views here, and then dive into the topic from there. 

According to Forbes in 2019…

 

A recent study by the Congressional Budget Office, entitled “The Effects on Employment and Family Income of Increasing the Federal Minimum Wage,” was conducted to determine how increasing the federal minimum wage from $7.25 to $10, $12 or $15 per hour by 2025 would affect employment and family income. The conclusion was that increasing the federal minimum wage would have two major impacts on low-wage workers: earnings would increase for many, which would lift some families out of poverty. However, other low-wage workers would become jobless, their family income would drop and it could place them below the poverty threshold.[1]

 

But th Economic Policy Institute in 2019 takes the opposite approach in a study they conducted….

 

My colleague David Cooper has estimated that raising the minimum wage to $15 by 2024 would lift the pay of about 40 million workers, or 27 percent of the eligible workforce. Affected workers who work year-round would receive a raise on the order of $3,000 a year. This is enough to make a tremendous difference in the life of a preschool teacher, bank teller, or fast-food worker—more than half of those working in each of these occupations earns less than $15 per hour today. More broadly, low-wage workers today constitute a large portion of the workforce. About 25 percent of all workers earned $13 or less per hour in 2018 and the vast majority of them would benefit from a minimum wage increase to $15 by 2024. [2]  

 

Raising Min Wage Would Be A Bad Idea

 

I believe that raising the minimum wage would be extremely harmful to the United States of America for three main reasons.

 

The first main reason is simple is pretty much the argument that is always repeated when a debate about raising the minimum wage comes up. Raising the minimum wage would simply mean that people have no jobs. Two reasons for that. The first is that sure some families will benefit from an increase in the minimum wage and will be lifted above the poverty line. However, they do so at the expense of other low-paid workers who will now lose their jobs. This is simply because many businesses would be forced to fire workers to keep costs low. That is according to a study done by the Congressional Budget Office. The Economic Policy Institute does rightfully claim that people will have better-paying jobs. That's 100% correct, it just doesn't take into account the people who have to lose their jobs so that others can have good-paying jobs. The second sub reason is that it just incentivizes companies to use more technology to replace workers since that would be cheaper. This would mean even more jobs would be lost. 

 

The second main reason why increasing the minimum wage would be harmful is that it would raise costs. Businesses won't be able to fire enough workers to make up for the minimum wage increase, so the rest of the increased wages will be passed on directly to consumers. This means higher prices for all Americans. Americans will now have no jobs and have to pay even more for the goods they need. 

 

The third main reason why increasing the minimum wage would be harmful, is that wage prices should be a contract and decision between the worker and payer. If you want to employ someone, you should be able to set the price -- if the worker doesn't like that price, then the worker doesn't have to work for you. 

 

Finals Thoughts

 

In conclusion, increasing the minimum wage would be devastating to America. As reported in the CBO study, many low-wage American families would be hit the hardest, since they would be left without jobs and with no hope for an income.

 

Work Cited

[1] https://www.forbes.com/sites/jackkelly/2019/07/10/the-unintended-consequences-of-the-15-minimum-wage/#2bdebd0ee4a7 

[2] https://www.epi.org/publication/minimum-wage-testimony-feb-2019/


JSM

About Me — JSM!

I am a programmer who blogs, an entrepreneur who writes.

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