Consequences of Raising the Minimum Wage
Alex Wahlgren
When I apply for my job in a few weeks I, as would the millions of other people currently employed in a minimum wage job, quite frankly would love to be paid ten or fifteen dollars an hour. Spearheaded by presidential nominee Hillary Clinton and senator Bernie Sanders, there is a movement to create a spike in the United States minimum wage. Despite valid arguments from both sides, some things are too good to be true. A sharp increase in the minimum wage is overall a decision that would not help those in poverty and is ultimately the wrong direction to head in.
It’s understandable, isn’t it? More money in the hands of workers would theoretically help bring them out of poverty and give them the boost they need to rise above poverty, wouldn’t it?
Unfortunately, this may not entirely be the case. No decision can be made without consequences and thus a trade off is made. I can’t expect that if I decide to hang out with my friends instead of doing my homework that there will be no consequences. As such, raising the minimum wage to $9.00 an hour would result in 100,000 jobs lost, while raising the minimum wage to $10.10 an hour would result in around 500,000 jobs lost, according to the congressional budget office. Entrepreneurs and business owners simply can’t afford to pay employees 10 dollars an hour, resulting in widespread layoffs. Ultimately, it will be more difficult for those in poverty to find a job and retain it, resulting in a massive unemployment hike. Therefore, the success that the United States has in the economic goal of full employment would be compromised.
In addition, many of the jobs that pay minimum and low wages will see the companies replace them with automated machines and robots. According to a Wall Street Journal article, McDonald's intends to “make it easier for customers to order and pay for food digitally and to give people the ability to customize their orders.” It would be foolish for banks to keep tellers, for restaurants to keep cashiers, for factories to keep assembly line workers that get paid ten or fifteen dollars an hour when they can easily replace them with salary free machinery.
Even if there were no job consequences to the minimum wage movement, this still would not have the effect that proponents intended. The Bureau of Labor Statistics reported that half of everybody who received minimum wages or less were under 25 years old, meaning that half of the people receiving the proposed increase are people who are less likely to have started a family, as shown in the chart below.
However, it would be unwise to conclude that a minimum wage increase is a terrible idea on paper and in theory, to propose that this issue is simply a black and white, with us or against us quandary. According to journalistsresource.org, inflation has caused the minimum wage rate to be drastically lower than it was back before the nineties; for example, the minimum wage back in 1968 would’ve been ten dollars an hour in the current monetary value, and in the eighties, it would’ve been nine dollars an hour today. 
Also, a raise in minimum wage would likely allow people who still have their jobs to live above the poverty line instead of below it.
So what we have here is a tough decision to make, but overall, the marginal cost of outweighs the marginal benefit of raising the minimum wage; costing thousands upon thousands of jobs outweighs allowing people to live just above the standard of living. Unfortunately, this is life - measuring opportunity costs and giving up a desired effect in order to achieve the best results. If we can guarantee that thousands of people have jobs, then they have a better chance than they do without one, and therefore raising the minimum wage is in the end not a good idea.
The minimum wage debacle is, as too many issues are, a supremely complicated one, and I sincerely hope that I’ve shed some light on the actual effects of raising the minimum wage.
Works Cited
States, Congress Of The United, and Congressional Office Budget. CBO(n.d.): n. pag. Congressional Budget Office. United States Congress. Web. 25 Sept. 2016.
"Minimum Wage Backfire." WSJ. Wsj.com, 2014. Web. 26 Sept. 2016.
"Ratio of Minimum Wage to Average Wage, circa 2011." (2014): n. pag. BLS Reports. Bureau of Labor Statistics. Web. 25 Sept. 2016.
@TCFdotorg. "Graph: Why Democrats Want to Rebrand the Minimum Wage as a Women's Issue." The Century Foundation. N.p., 08 Mar. 2016. Web. 26 Sept. 2016.
"Minimum Wage: Updated Research Roundup on the Effects of Increasing Pay - Journalist's Resource." Journalists Resource. N.p., 08 Aug. 2016. Web. 26 Sept. 2016.
I find it interesting that the minimum wage in the 60's is the equivalent to $10.00 due to inflation.
ReplyDeleteI agree with the idea that increasing minimal wage is not the smartest decision. When some people hear about increasing the minimal wage, they go along with it because all they care about is having more money in their pocket. Most don't think about how prices could rise due to higher quantities of money being accessible to people and how a lot of people would lose their job because of these raises.
ReplyDeleteThis relates to me as I have always wanted the minimum wage to be raised even the smallest amount. In my opinion, it doesn't make sense though, because raising the minimum wage isn't important enough for all the jobs that would be lost. Maybe they could raise it to like $8.50 or $9, but $10 is a pretty steep increase. Maybe we can figure out a way to meet in the middle.
ReplyDeleteWhile I appreciate your final thoughts where you view both sides of the coin, some of the pieces of information you synthesize are a bit questionable. You argue that while many of these employees are working for large corporations,these businesses, however, can't afford it, is a bit of a stretch. This argument stems from the greed of the CEO'S, the company Chair, all these people whose low wages help create the larger problem of income inequality in this country. The Congressional Budget Office that you cited, upon further reading, shows that minimum wage would also lift 900,000 families (not people) above the poverty line, and drive up the demand for goods.Highers wages also means higher income taxes that go towards the government.
ReplyDeleteAlternatively, I disagree that teenagers should be making the same amount of money as an adult, even if they same work is being done. I, personally, would propose a split minimum wage, where teens make between $7.25 and $8.15, whereas adults can make upwards of $9.75 or the commonly referenced $10.10.
I don’t think raising the minimum wage to 10 dollars is a good idea. Even though some people would make more money and be able to be more prepared for the future. It would be even harder for people in poverty to get a job and maintain it because with some people getting more money companies would have to let go of some of their employes. However the minimum wage should be raised by like 10 to 15 cents so that way people can make a little more money per hour and not a lot of jobs will have to be lost for that raise in the minimum wage.
ReplyDeleteI completely agree that raising the minimum range wouldn’t be a good idea. It’s easy for people to think that raising the minimum range would cause people in poverty to no longer be in poverty. Unfortunately that’s not the case. Personally, I feel if the minimum wage is raised, it will only put us backwards with sales prices increasing and the people in who aren’t working as hard, being handed more money. Also, even if the minimum range was risen, there is always going to be a low and there’s always going to be a high so the same issues we face now, will just continue to circle back to what it used to be. Before I never thought of the unemployment increasing, but that is always a strong point.
ReplyDeleteHey Wally! After reading your blog post I began to think about you were saying more. Raising the minimum wage would likely have more of a negative effect rather than a positive effect. This is because as you raise the minimum wage to 9 or 10 dollars an hour what you are doing is causing the prices of everything else around us to cost more. Since people will be making more money, others in the top of the industry or in living developments will want more money for their product. Really all that you would be doing is causing the countries currency to become more and more common. This in turn will bring down the actual value of a dollar and nobody wants another great depression in modern day society.
ReplyDeleteThe demand for higher minimum wage is a debate that shouldn’t be occurring. What unachieving employees don’t realize is that multimillion dollar companies run businesses all over the world to generate a profit. They have thousands upon thousands of workers who serve their customers. The low wages help them offer their goods/services at a small price to the consumer, therefore, gaining more and more customers everyday. Regardless, technology continues to develop and strategies on making faster, easier transactions continue to hit our world everyday. The battle of employees versus corporations needs to come to an end with these ridicule demands of raising minimum wage.
ReplyDeleteI can see why people would think that raising the minimum wage sounds like a good idea, because who doesn't want more money? However, it can cause some serious issues, like mentioned above. People would get sick of $10 per hour, and then want that raised again. If people want more money, then they should get a higher education and earn it. When I worked at McDonald's, I was making minimum. Of course I wanted more, but at the same time, I wasn't really doing a whole lot, even though it felt like I was. Higher degrees in education equal to higher wages, not just because people are lazy and don't want to work for it. I see this as the people who want the higher minimum wage, are people who don't want to work for it. Lastly, I think it's interesting that the minimum wage has decreased by almost $2 since the 60's.
ReplyDeleteI wholeheartedly believe that raising the minimum wage is a bad idea. If you raise minimum wage, you raise the cost of living, and people don't seem to understand that, if minimum wage is raised, they'll just be in the same place they are now, poor, and inflation will greatly reduce the value of the dollar.
ReplyDeleteI agree with your idea of not drastically increasing minimum wage. I don't think a loss of 100,000's of thousands of jobs is worth such an exponential increase in pay. The debate about raising the minimum wage is almost a pointless debate.
ReplyDeleteFirst off, your blog post was very well written! I was intrigued the entire time! Second, I agree with what you said about how raising the minimum wage will cause a loss in jobs. It is staggering to know that $10.10 an hour would result in 500,000 jobs lost! The demand to raise the minimum wage continues to increase, but it’s sad that people don’t realize that a significant increase in the minimum wage will result in job loss. If the United States expects the full employment to increase, this is not the direction to go. Not too long ago, I ran across a picture that talked about raising the minimum wage and it explains it all: (unable to paste picture) but it has three workers, where two say "I got a raise!" and the third says "My boss fired me to pay for their raise." The title is 2 out 3 like a Minimum Wage Hike. The people want the minimum wage to increase, but they don’t realize that they could be the ones getting fired and not getting the raise. And replacing people with robots and kiosks is absurd because then what’s the point of even having workers? And then if the machines break, who’s going to fix them or pay to have them fixed? It is better to keep workers with a minimum wage or a little above minimum wage so the unemployment rate and full employment rate can increase.
ReplyDeleteI do agree that minimum wage comes at a cost; if more people live above poverty, the unemployment rate increase. But I do think it is important to consider the cost of living. It is more expensive to live in LA, California versus Pewaukee, Wisconsin. Therefore, I think it's important that minimum wage be related to purchasing power. It's unfair that someone working in California and Wisconsin make the same wage because the Wisconsin worker will be able to afford more than the Californian worker. Some states (New York, CA) have already raised their minimum wage with this idea. I think that minimum wage should be raised in specific states, so the purchasing power of minimum wage workers is consistent across the nation.
ReplyDeleteReading this post, it was helpful to have statistics supporting both sides of the argument in order to keep the information accurate and representative of the actual situation. One aspect that you don't consider in this article is the probability of inflation due to an increased minimum wage. When minimum wage employees earn more, the salaries of many other jobs also raise to reflect the new relative value of the employee's work. Furthermore, when people have more money to spend, over time producers will be able to charge more for their products and services. In this way, many people will be no better off if the minimum wage is increased. Maybe an alternate solution to the problem would be making vocational training more accessible and affordable so that the employees themselves can become more valuable and find jobs that support their families and lifestyles.
ReplyDeleteI think you make a good point fighting against being biased and staying to both sides, but if we raise minimum wage, inflation would likely incur an undesirable outcome. That in which would be that all the more money they make is still technically what they made when they started because prices for goods will be higher as the wage gets higher. Cassie does have a good idea about how wages should be changed by state, but by then we would have many more people trying to work in other states and using loopholes by living in another. Some states have different laws or taxation, and this could all be evaded or cheated out to smaller payables.
ReplyDeleteAs someone who’s been working for minimum wage for nearly two years, I personally would love to have the wage raised to 10 dollars or higher. I even plan on changing jobs once I turn 18 to a job that would pay me more for my services. Even though I know that it can and probably will cause issues in the economy, my personal thoughts are that they should raise it. After all, inflation is happening anyways and more and more people are starting to not make as much money as before, especially those working jobs where they would benefit from a raised wage. It may cause jobs to be lost but as you pointed out, robots automating some industries are killing those jobs anyways.
ReplyDeleteI agree immensely with this statement, this is life and personally if you want a job that pays you more than minimum wage, you have to work for it. Life isn't going to hand you everything you want, and a lot of times your job is something that is able to teach you just that. You don't necessarily always get that raise you were hoping for, or get the praise you want because sometimes life isn't all about getting what you want, but learning from the things that you don't get. I liked that there was evidence supporting both sides of the argument,that yes everyone wants to make more than minimum wage and the perks of that, but at the same time how it isn't really a foreseeable outcome. Personally the work experience is what helps to get you somewhere in life, not necessarily the education level you've achieved, or who you parents were (although those things can help), if you're working a high school job and aren't liking how much you get paid, maybe it's time to ask for a raise, or start looking for a new job, because money isn't just going to fall into your lap one day, it's something that you are going to have to work for and maybe with trying to get the education or get the work experience your are going to lose out on some of that money, but just think of the end product and how much you are going to be able to gain from it as well. Work experience is valuable, and as long as you have a job, you are most likely able to sustain your life needs, if you know how to budget your money.
ReplyDeleteI agree that ultimately raising the minimum wage would not be a good idea. Although raising it would for a short time put some people above the poverty line, eventually it wouldn’t help at all. If minimum wage becomes higher than most likely everyone else’s salary would become higher as well, causing inflation, which is not good for anyone. I can see where some people think raising minimum wage may be the answer, but I think there are better answers that people should consider, such as finding government programs to help them receive more schooling, etc. I also find it interesting that you brought up the fact that raising minimum wage might be the ultimate push for employers to buy robots instead of workers because why would they pay workers $10.00 an hour when they could just have a robot do it for them? You brought up a lot of interesting points throughout your piece and I enjoyed how you included strong evidence to back up your claims.
ReplyDeleteI definitely agree that raising the minimum wage would have it's drawbacks. Although it sounds perfect to teenagers and others that get paid around maybe $7.25 or $8 an hour, it's just not realistic. In order to pay employees more, you'll need to cut down on the number of employees. As a result, less people will be employed like you said. Also, if people started earning more at their jobs, they wouldn't really have more money when the price of things start to increase as well. Soon, it would be like the minimum wage was never even changed. Overall, increasing the minimum wage is not the smartest decision.
ReplyDeleteI agree with your statement amount minimum wage. Yes, it would be nice for workers to get paid more, however, ten dollars an hour does seem a bit extreme. And just because someone starts their job at minimum wage does not mean that it will always be that way. At most jobs, if you are a good employee, you will start to get raises eventually. I know that I started at minimum wage a year and a half ago and am now going to be at nine dollars, so hard work really does pay off. However, while your article is definitely persuasive, I would have actually liked to see you explain your graphs a bit more. For example, in the pie chart, you state that half of the people with minimum wage are under twenty-five, which would make sense, but I suppose I just thought that percentage would have been higher. This means that half of the people with minimum wage jobs are over 25 and the biggest section of the graph is women over 25, which makes me curious as to why this would be. But overall, I definitely agree that it would not be wise to raise the minimum wage at this point.
ReplyDeleteI have often heard about raising the minimum wage to $15, but I never knew that there were so many negative aspects to this. When you talk about how raising the minimum wage to $10.10 would effectively lose hundreds of thousands of jobs, it scares me to think about how many more jobs would be lost if the minimum wage was raised to $15. This reminds me a lot of quantity vs. quality. Is it worth making the quality of life better for those who are currently being paid minimum wage at the cost of the quantity of jobs that are currently available?
ReplyDeleteWow Alex! You really succeeded in your goal to shine light on this issue. I think that people often rush into ideas like these, without realizing the trade-offs and marginal costs involved. In fact, this reminds me of Bernie Sanders's goal to eventually make college tuition-free. Like the idea of raising the minimum wage, free college seems awesome! But also like raising the minimum wage, free college is far too good to be true as it would sap majority of the government's funds, which would definitely outweigh the marginal benefit as a lot of those families could probably afford their kid's college to begin with, among other things. Wow, maybe I'll write my blog post about that.
ReplyDeleteThis blog post was really well written and I wanted to keep reading to see what you had to say about the topic. I personally have not thought much about raising the minimum wage, but after reading this post I have gained a lot more knowledge on the topic. I was unaware that raising the minimum wage would greatly impact other due to the significant amount of job loss. If this were to happen, the country would have even more unemployment which would most definitely impact the goal of full employment negatively. It came to my attention that all these people want to increase the minimum wage, but have little idea of what would be effected if that really happened. Those who want the increase could quite possibly be the ones who become unemployed. In increasing the minimum wage, one person is fired in order for that increase to occur in someone else's salary, and this is what the people are oblivious to. Another thing that came to my attention was the topic of using robots. I personally don't think replacing everything and everyone with robots is the answer, solely because of the fact that after a while, nobody will have a job due to the take over of technology. Overall, I learned a lot from this passage and the information within it has really helped me to understand the minimum wage increase debate.
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ReplyDeleteI agree that raising minimum wage sounds good, but ultimately the marginal cost of paying people more is greater than the marginal benefit earned. For example, people are currently advocating for the minimum wage to be raised to $15 per hour. However, if it is raised, those workers will not get increased pay, they will get fired. If a particular worker earns a company $10 per hour, but it is forced to pay the employee $15 per hour. It doesn’t make sense for the company to employ that worker. On the other hand, if we could afford to pay minimum wage workers $15 per hour, they would receive an annual salary of $31,200, which would put them above poverty line. However, it isn’t that easy.
This is precisely why the minimum wage should be set on a state by state basis, versus raising the national minimum wage. It makes sense that California's minimum wage is higher than our $7.25 because cost of living out there is much higher and there is a large amount of consumers. This means the businesses are willing to pay the extra for their employees since the benefit of more sales is expected. Businesses in small towns, or business in a low traffic area would not benefit by a raise in minimum wage. Said businesses would be unable to compete with their rise in operating costs. It could also be said that raising minimum wage would decrease the consumer's happiness with their transaction. With a higher wage stores will likely decrease the amount of cashiers, and overall staff. Thus slowing the shopping experience and making more problems for the workers.
ReplyDeleteI would agree that increasing the minimum wage is overall a bad idea. Most low wage job holders are in employment to large companies with one intention; to make money. It is very likely that a minimum wage increase would be incentive for these companies to lay off thousands of workers in favor of technology, or to purely keep a constant profit. As the chart showed in your essay, most low wage job holders are also under the age of 25. These positions are filled by high school and college students who most likely won't be supporting families, but saving for college and spending money on miscellaneous products. Also like Alex said in his essay, we can't just look at the negatives of raising the minimum wage. To keep an economy moving you need to keep consumers spending, and the minimum wage would accomplish that goal. However, the most likely won't be putting that extra money into the hands of the producers they work for, but for the necessary products they need such as rent, other bills, college savings, or family support. This effects the producer in a very negative way and is why they would be inclined to lay off a vast amount of workers.
ReplyDeleteI agree completely that raising minimum wage would be a catastrophe. As you made the point about the results of inflation in the 60s and 90s of the consequences, it is also noteworthy that the overall price of most goods would increase as well. Hypothetically speaking, the price of milk or some other common grocery item could more than likely raise to perhaps $5 a gallon due to the new minimum wage. I also think that what you stated about the affect in poverty is very interesting since the massive number in job layoffs would increase due to companies not being able to afford their workers needs, which would result in a greater percentage of poverty throughout the country. It seems a little ironic that the same thing meant to help the numbers of people in poverty decrease would actually be a factor contributing to its that increases that number.
ReplyDeleteI have often heard about raising the minimum wage to $15, but I never knew that there were so many negative aspects to this. When you talk about how raising the minimum wage to $10.10 would effectively lose hundreds of thousands of jobs, it scares me to think about how many more jobs would be lost if the minimum wage was raised to $15. This reminds me a lot of quantity vs. quality. Is it worth making the quality of life better for those who are currently being paid minimum wage at the cost of the quantity of jobs that are currently available?
ReplyDeleteI agree with your statement amount minimum wage. Yes, it would be nice for workers to get paid more, however, ten dollars an hour does seem a bit extreme. And just because someone starts their job at minimum wage does not mean that it will always be that way. At most jobs, if you are a good employee, you will start to get raises eventually. I know that I started at minimum wage a year and a half ago and am now going to be at nine dollars, so hard work really does pay off. However, while your article is definitely persuasive, I would have actually liked to see you explain your graphs a bit more. For example, in the pie chart, you state that half of the people with minimum wage are under twenty-five, which would make sense, but I suppose I just thought that percentage would have been higher. This means that half of the people with minimum wage jobs are over 25 and the biggest section of the graph is women over 25, which makes me curious as to why this would be. But overall, I definitely agree that it would not be wise to raise the minimum wage at this point.
ReplyDeleteMany of the comments in this section and article have talked about the negative direct side effects that happen when you raise the minimum wage. However I haven't seen anyone talk about the effects increased income have on the market. For example if you have a worker who's making $7.25 but then increased to $10.10, the worker has a lot more money to spend or invest in him/herself. Our economy is based on the consumption of goods and services and if people don't have enough money to spend growth does not increase as quickly. Henry Ford understood this concept as he paid his workers decent wages. Real Income in this country used to increase when productivity increased, however in 73' that changed. For example between 1948-1973 productivity rose 96.7% in step with hourly compensation which rose 91.3%. However since 1973 productivity has risen 74.4% but Hourly Compensation has only risen 9.2%. This shouldn't be the case. American Workers are more productive than they've ever been in history. Their incomes should reflect this. If we're not going to raise the minimum wage at least tie it to inflation.
ReplyDeleteI agree that there are pros and cons to the minimum wage. When looking at it from an economic standpoint, I don't think the government should disrupt a consensual transaction between an employer and an employee. No employer is forcing anybody to work for a given wage; the employee has the power to leave if they so choose. If their skills are valuable to society, the market will provide them with an appropriate job and wage.
ReplyDeleteBut when I look at the minimum wage from a humanitarian viewpoint, I don't think people should be starving just because they don't have skills that are valuable to society in the same way that I think mentally and physically disabled people have a right to not starve.
In my opinion, I think that increasing minimum wage is a bad idea. Mostly because of the unemployment rates jumping to such a high rate. Also, if minimum wages were to increase, then business owners would consider using new technology to replace paying employees. It does make sense why they would consider using that option if the wages were to increase,.. they wouldn't have to pay the machinery to do the work like they have to for employees. Although the higher minimum wage would allow people to be above the poverty line, it still includes 500,000+ people that would be jobless. That's just too much to consider, that's why the minimum wage should stay what it's like currently.
ReplyDeleteAlex I totally agree with your points being made. Although I would love the minimum wage to be raised in America the trade-off would not be worth it as hundreds of thousands of jobs would be lost. The companies can’t afford to be paying their employees 8 dollars an hour higher, basically doubling their previous wage. This would put lots of people out of business and lead to a spike in the unemployment rate, which all presidential candidates say they will reduce. Overall, although nice for us teenagers, a raise in minimum wage will greatly reduce the efficiency of the economy.
ReplyDeleteI agree that raising the minimum wage by a significant amount would do more harm than good especially changing the inflation. However I disagree with the fact that 500,000 people would lose their jobs if the minimum wage was raised to $10.00 an hour. I don't think businesses would switch to robot workers, or layoff workers because they can't afford them. Most companies that are paying minimum wage are multi million dollar companies that can afford to pay their workers a little extra.
ReplyDeleteI agree that raising the minimum wage by a significant amount would do more harm than good especially changing the inflation. However I disagree with the fact that 500,000 people would lose their jobs if the minimum wage was raised to $10.00 an hour. I don't think businesses would switch to robot workers, or layoff workers because they can't afford them. Most companies that are paying minimum wage are multi million dollar companies that can afford to pay their workers a little extra.
ReplyDeleteI agree completely that raising the minimum wage would not help low income and in poverty Americans. Like he said companies would not be able to pay the same amount of worker if wages went up. This is even seen in the Supply and Demand charts, when the wages of employees rise the supply will go down meaning they lost some workers. Also if minimum wage went up the value of money would mean less and the cost of inferior goods would rise. Overall I agree that minimum should not be raised.
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