When the minimum wage was created in the United States, the goal was to provide a living wage for everyone who wanted to have a job. As the years have gone by and inflation has hit the value of money, the concept of a living wage has all but disappeared. People who work at the low minimum wage in the US are finding it difficult to make their ends meet, even though they are working full time. By evaluating the pros and cons of raising the minimum wage, we can determine if and by how much it should be increased for workers.
What Are the Pros of Raising the Minimum Wage?
1. It gives the average worker more spending power.
More money in a paycheck means employees have more money to be able to spend. Local dollars have an almost 2 to 1 value to them, which means the money they spend locally will have a double benefit. This could mean a local economic boost for areas that are willing to take the initiative now to raise the minimum wage.
2. It raises the standard of living for everyone.
It isn’t just a minimum wage that goes up. Everyone receives higher wages because there is more wealth being spread about. Tax revenues increase, public servants can be paid more, and small businesses are able to bring in more revenues because people are able to have more discretionary spending.
3. It provides workers with actual motivation.
If you’re working full time and earning less than $20,000 per year, the idea of going to work can be demotivational at best. Higher salaries mean fewer people on taxpayer income supplemental benefits, which helps the economy in other ways as well.
What Are the Cons of Raising the Minimum Wage?
1. It may cause businesses to fire employees.
If a small business has three people who are earning minimum wage and the wage goes up, the business owner may only be able to afford two people. This means that one person out of the three is going to lose their job. If the minimum wage increase is dramatic, it could even mean two people lose their jobs.
2. It may create regionally high levels of inflation.
Higher wages in specific industries like fast food or general labor mean that the prices of goods in those industries are going to go up as well. This means higher costs for everyone, which could actually limit the spending power of households that are seeing limited raises or none at all because they’re already above the minimum wage in earnings.
3. It devalues the need for education.
Higher educational levels are supposed to command higher wages, but the middle class in the US has been static for thirty years. By bringing the minimum wage up to middle class levels, the only people who don’t gain from the increase would be the existing middle class. They would be forced to spend more to get the same products.
There are some definite advantages to raising the minimum wage, but it should be done carefully so that one demographic isn’t injured in order to provide benefits to another. By evaluating the pros and cons, it may be possible to create meaningful changes.