Why has Minimum wage Increased?

Why has Minimum wage Increased?

Written by: Nathan Theriault 

When looking at the minimum wage, you wonder if it’s too low or too high. For a moment, it was very low and seemed to not be enough for people who were in need. As of late, the minimum wage has increased to about 15 dollars an hour. This change has been made to stimulate consumer spending, help businesses’ bottom lines, and grow the economy.

As minimum wage increases, one of the main goals is to stimulate consumer spending. By raising it, consumers will be willing to spend more on final goods and services. The amount paid per household is more than likely to increase as the minimum wage increases. With households and individuals spending more money, the business would be impacted positively and help them with their profits.

With the businesses being impacted positively, the minimum wage would help with their bottom lines. What is a businesses’ bottom line? According to investopedia, this term refers to “the net income, net earnings, or their net profit.” With the minimum wage increasing, these three things should be positively impacted due to people making more money than they were previously. This is due to people having more money to spend and possibly not knowing how to spend that money correctly (especially at the start).

When thinking about people spending more money and having higher wages, there’s also a possibility that the business tries to take advantage of the situation and raise their prices. By doing this, they are trying to get the maximum value out of the customers as they seem to be willing to spend more money due to their higher wage. If businesses take advantage of this correctly, they can become very successful and go above their competitors.

This brings me to my last point about how many people are in need of more money per hour and don’t get paid enough for what they do. The economic policy issue states, “An increase to 12 dollars an hour would give nearly 35 million workers a raise.” This is about 20 percent of all employed people in the U.S. The amount of people impacted by an increase in minimum wage whether good or bad would be a tremendous amount.

As you can see in the graph above, with people making more money an hour, it creates more revenue and total cost per day.

When looking at this topic overall, there are pros and cons to increasing the minimum wage. The people in poverty would benefit greatly and get a boost in money to help them out. Businesses would mostly benefit and make more money if they price their items correctly. Consumers would end up paying more of their money now that they’re paid more and it would positively impact these businesses and the economy. Minimum wage has increased to help boost people in poverty and to keep money flowing to businesses.

Works Cited

Raising the Minimum Wage: Good for Workers, Businesses ... https://edlabor.house.gov/imo/media/doc/FactSheet-RaisingTheMinimumWageIsGoodForWorkers,Businesses,andTheEconomy-FINAL.pdf. 

Tuovila, Alicia. “Bottom Line.” Investopedia, Investopedia, 19 May 2021, https://www.investopedia.com/terms/b/bottomline.asp#:~:text=The%20bottom%20line%20in%20business%20refers%20to%20a%20business's%20net,by%20deducting%20expenses%20from%20revenues.