Raising minimum wage to $15 leads to higher prices, unemployment
By Alex Kirshner ‘18
The idea of raising minimum wage from $7.25 to $15 has been a hot topic amongst politicians and activists around the country.
The main argument for raising minimum wage is that $7.25 is not enough for a person to live off of alone, and it is certainly not enough for someone who is trying to support a family. Supporters of the wage increase argue that everybody who has a fulltime job should be making enough money to support themselves, no matter what their job is.
While this is true, it is simply impossible to raise the minimum wage without suffering massive economic and social backlash.
For example, companies that have to pay their employees more than twice as much as they were before are going to suffer greatly in terms of their profit margin.
The heads of these companies will not take too kindly to these losses, and will do anything they can to bring their revenue stream back to normal.
There are two ways for these companies to increase their profits, with the first one being to raise the prices of their goods in order to offset the wage increase. This does not seem as bad on the surface, but people should not be forced to pay double for a cheeseburger unless the quality of that cheeseburger has been increased, which is a totally different subject.
The second way for companies to make up for their profit loss would be to not hire as many employees, and make sure that the employees they do hire are experienced and worthy of making twice as much money as they were before.
Not only would this increase the unemployment rate, but it would make it harder for high school kids to get jobs.
Also, it is no surprise that the people who want to raise the minimum wage are people who are working for this low payment or who have been forced to work for minimum wage in the past.
The fact is, everybody wants to make more money, but that doesn’t mean that we should double their pay.
Unfortunately, raising minimum wage would only help temporarily. With the increase in costs of goods, $15 an hour may no longer be enough to live off of, and then what?
Will people once again call for an increase in pay, or will they finally start to realize that the easiest way out of poverty is through a good education and hard work, rather than asking the government to force your employers to pay you more?
I would love for everybody to make enough money to live comfortably but, unfortunately, that is not how our system works.
In some cases, there are people who were not given the chance to get a good education or even go to college, and minimum wage jobs are the best they can do given their circumstances.
Therefore, I believe that slight increase in pay would be beneficial, such as a raise to $9.25 per hour, but doubling the current wage would be too steep for our economy to overcome.
If wages were raised to $9.25, the annual income would increase to $19,240 per year, which is both above the poverty line, and would not lead to a sharp decrease in profits for large companies.
The bottom line is that minimum wage is not an issue that can be resolved quickly, but raising it to $15 per hour is not the right course of action.
High risk, high reward landmarks wage debate
By Reece M. Krantz ’16
For many Americans, minimum-wage employment was a temporary, teenage condition as they bussed tables or answered phones or cleaned rooms for tiny paychecks before moving on to more financially rewarding work.
However in 2011, 3.8 million U.S workers — most of whom were out of their teens — earned the federal minimum wage of $7.25 per hour or less, according to estimates by the U.S. Bureau of Labor Statistics.
And recently, debate has heated up about whether the government should raise the minimum wage, increasing both the earnings of the lowest-level employees and the costs for employers.
Advocates for a higher wage floor argue, first and foremost, that it is right to ensure that workers to earn enough to live on.
An employee working a 40-hour week at the federal minimum wage would earn $15,080 per year. This income would leave a two-person household — say, a single parent with one child — just below the federal poverty threshold of $15,130.
About 70 percent of minimum wage employees, however, work fewer than 35 hours per week and thus earn proportionately less, according to federal labor statistics.
Iowa has introduced legislation that would raise the federal minimum wage to $9.80 — about $20,400 for a year of full-time work — within two years. In subsequent years, the required pay rate would be increased each year by the same percentage that the federal Consumer Price Index rises.
Supporters of increasing the minimum wage also contend that such a move would act as economic stimulus.
When low-income households earn more money, they are likely to spend it, pouring more dollars into the economy, the argument goes.
In fact, a recent study by the Federal Reserve Bank of Chicago concluded that, following an increase in the minimum wage, spending by households with at least one minimum-wage worker increased by $700 per quarter.
“By increasing workers’ take-home pay, families gain both financial security and an increased ability to purchase goods and services, thus creating jobs for other Americans,” concluded the Economic Policy Institute in a brief statement supporting minimum wage increases.
A higher minimum wage might also decrease turnover and thus keep training costs down, supporters say.
Those who oppose an increase to the minimum wage, however, argue that the effects on employment rates would be exactly the opposite of those supporters foresee.
A higher minimum wage, they claim, would be too heavy a burden on employers, especially small business owners. And those employers, in turn, would be unable to hire as many people or have to charge more for oops and services — an undesirable result when unemployment continues to hover at about five percent.
The risk and rewards, I think, outweighs and outlines a great benefit. After all, there have been zero studies to correlate wage and poverty.
Someone working a full time job should at least be able to live above the poverty line.
For the sake of change and progress, a step to increase minimum wage should at least be tried. its benefits could outweigh the costs greatly if successful.