Minimum Wage

Minimum Wage

For many Americans the current minimum wage is what they’ve come to know and live by. It is what either keeps them and their families above the poverty line or brings them down below. For some it might bring problems, and for others, it can be the factor that keeps them going. Minimum wage is a very controversial and debated upon topic. Many people in the U.S believe that the wage should be raised from 7.25 dollars and hour to 10 or 15 (Harvey). The other side of this topic or debate, is to keep the wage the same as it is now and stick by that.  Both sides have important and relevant points, but ultimately, increasing the minimum wage is not an effective or efficient way to improve the economy in the United States for the people who live there.

One of the most prominent and obvious problems with increasing the minimum wage would be the fact that it would cause businesses to lay off employees. A slight increase in the minimum wage, just from 7.25 dollars to 10 dollars would cause a list of problems for the businesses and the economy around them. That increase in wage would cause businesses to cut down on the amount of jobs they could hire or keep running. A decrease of around 500,000 jobs was predicted to be the result of rising to 10 dollars. In a poll 34 percent of business owners said they would have to un-employ workers, also 54 percent said that they would have to decrease the rate at which they would hire for open jobs (Harvey). This cause and effect scenario not only hurts the people looking for jobs and the people with jobs but it also hurts the economy around them.

On another thought, raising the minimum wage would cause sale prices of consumer goods to go up, and the portion size to go down. For example, In a study of price fluctuation, Forbes found that an increase or double to 15 dollars in the current minimum wage would result in the price of almost all consumer goods to increase by 4.5 to as much as 25 percent from their current retail price. This increase would put all people in the same situation as they are now, with the inability to buy or afford the current prices goods. We would be back to square one if the wages were to increase by that set amount. Not only would the prices increase, but the portions of which the retailers sell their products would go down. Portion sizes are expected to go down from 12 to 70 percent from the current sizes.  Some specific examples of goods that would take the most affect would be, fast food, guest rooms, and meeting facilities. This would turn into a situation of two wrongs would result from the one “right” as some would say. And quite often this would put the people in a worse situation than before, and in some cases put them in almost twice as bad of a financial disability. Sure getting double the amount of money in wages sounds nice, but in that case you would be paying more for fewer product, and that is not what the people need. People need to look at all the things that come with changing the wage, not just focusing on the initial outcomes.

In the world today one of the more pressing and relevant issues is the amount of poverty that exists in our world today. An increase in minimum wage would only further our plummet into poverty, not fix it. By definition poverty is the state of being extremely poor. By going up in minimum wage it would cause many businesses to cut down on the hours it allows the employees to work. Not only a cut down of hours would result, but also the loss of those jobs all together. Both of these issues correlate directly to the rate of people in poverty. Many economists have examined the evidence and come to the conclusion that the minimum wage does not reduce poverty whatsoever. Ohio University economists Richard Vedder and Lowell Gallaway examined the effect that increases in the minimum wage had on the overall poverty rate in the United States and on the poverty rates for groups like minorities and teenagers. These economists found that the minimum wage had no detectable effect on poverty rates. So all together, poverty rates would only increase as the minimum wage goes up.

Companies closing are another major issues that would arise by increasing wages across the US. Half of stores across the US would have to close to afford the new wages. In some cases companies would have to let go of workers and would no longer be able to sustain a business forcing it to close. In some studies and polls it was also found that many of the big stores chains like Walmart would have to be closed in rural towns to continue to make a profit. Stores would also be affected by the increase In the amount of goods they would have to sell in order to sustain a profitable business. Working businesses weren’t the only ones affected. Businesses with small profit margins need to increase sales by hundreds of thousands of dollars to generate the profit to pay those costs. In some cases it was found that promised stores or stores who were soon to open had trouble keeping the promise and had to be closed because of the small profit margins. All of this would hurt the economy in places and cause a loss of jobs in all these places. Large business or franchises wouldn’t be affected as largely as little or private business. These small organizations have a much smaller profit margin, which wouldn’t allow them to make the change. In many cases this is what families rely on to keep them functional. Companies are what keeps everyone going and without these nobody would be successful, which is why we should stay where we are.