The Minimum Wage Battle: Fighting Against the Increase

The Minimum Wage Battle: Fighting against the Increase

Minimum wage laws have a simple goal; to put a floor on the amount of money an employer can pay an individual for one hour of work. While nearly everyone agrees that low-income workers deserve some help, minimum wage laws that increase the pay level are controversial. The minimum wage law may seem like a one sided issue; however it is not. There are strong proponents as well as opponents of ideas of large-scale changes to the system. Although a minimum wage is needed in America an increase in the minimum wage on a national level does more damage to the economy than it does help. Due to that the minimum wage level should at this point in time remain the same.

If you increase the minimum wage it does not simply mean that employment levels will stay the same, and everyone in the workforce working at minimum wage will now earn more money. The money being paid out to employees has to come from somewhere, and unless those costs are passed fully to the consumer it will hurt the employer’s bottom line. If the employer has to pay more in labor costs, it may be in his best interest to cut his labor force in order to save money. A concrete example of this lies in universally accepted economic theory, which says that as price goes up demand goes down. The interpretation is that as the price of labor increases, the demand for labor has to decrease. This means that although all employees working at minimum wage are guaranteed an increase in pay they are not guaranteed that their job will be there after the increase takes effect. This can cause more harm to the economy than good. If people lose their jobs due to an increase in minimum pay then the institution that enacted the resolution has shot itself in the foot. While attempting to better the lives of those working at minimum wage levels those in favor of increasing pay have in turn created economic instability for all hourly workers in America. There will be fewer jobs to go around due to increased labor costs, thus creating higher rates of unemployment and additional poverty. Although they may mean well, those who want to increase the minimum wage actually are hurting those they set out to help.

Along the same lines of decreased work opportunity for those directly affected by minimum wage increases lies the problem in store for employers and employees if a minimum wage increase does occur. Many people in favor of minimum wage increases say that another strong outcome of the increase is the “ripple effect” in which many employers increase pay for those making more than minimum wage. They argue that this “ripple effect” causes more money to flood the market, and in turn boost the economy. They argue that because people will now have more money in their pocket, they will spend more money. However, this is not always the case. Consider the first term of George W. Bush’s presidency when he made a tax cut to “jump start” the economy. The idea was to put more money in pockets of Americans, because if they had it they would spend it. It was quickly realized that a large number of people were putting this tax cut to savings. Just because people have more money does not mean they will spend it. The tax cut did not boost the economy as the President suggested it would. The same scenario would apply if there were a national minimum wage increase. The wage increase also puts a major burden on business owners. According to studies done by the Center for American Progress, it was estimated that a $1.00 per hour increase in the Florida minimum wage would cost $406 million in additional labor costs to private business owners. Increases like that affects the economy. This is a single state example, but the effect on a national level would be even greater. Employers would be unable to keep all the employees that they had before the increase because now their costs of operation would have risen by so much so fast. If you look at the increase on a smaller, more manageable scale you see that increases really can hurt a small business owner. A small business with fifteen employees working at minimum wage and for standard workweeks would have weekly labor costs rise by $600 per week. Over the course of a year that increase amounts to over $30,000 in additional pay to employees. Amounts of money in that proportion can sink a small business very quickly.

Additionally those in favor of increasing the minimum wage point to the fact that if you are working full-time at minimum wage levels you will end the year below the