The Cost of Raising the Federal Minimum Wage

How a movement intended to help boost the economy and improve the lives of middle and lower class workers will hurt them.

Supporters of raising the minimum wage argue it will help America’s poor earn more, raising the general standard of living, and lowering the number of people who are on welfare. They also argue that a raise of the minimum wage could provide a boost to the economy, as lower-income families are more likely to spend the money they earn, pouring it back into the economy.

However, when federal requirements force businesses to raise wages for workers, that money has to come from somewhere. Especially for small businesses, this would result in a price hike to accommodate the cost of higher wages for their workers. Increased cost of living that would result from increased costs of all products would negate the wage increase for lower income workers, and negatively impact middle class consumers who wouldn’t stand to benefit from the minimum age increase.

The second action businesses could take to cope with the higher costs of paying their workers is to simply lay off workers, or give them less hours. A slightly lower than ideal minimum wage is vastly preferable to being unemployed in an economy that offers a higher minimum wage, but fewer jobs.

The current minimum wage is not a living wage for United States standards. But raising the minimum wage is not an effective solution. Minimum wage workers deserve a solution that actually benefits them.

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