Evaluating the Pros and Cons of a Higher Minimum Wage
The minimum wage debate has been ongoing and active globally ever since New Zealand set the first national minimum wage law in 1894. From then on, millions of opinions on the base pay have been developed, formed, and voiced.
I was recently reintroduced to the topic of a raised minimum wage when I heard it was confirmed that Ontario would be raising its minimum wage to $14/hour starting in 2018, and $15/hour in the subsequent year. Since the announcement, it seems like the entire province has been bustling with assorted opinions about the concept of a higher minimum wage and it’s effects on our political and economic environment. This isn’t the least bit surprising, since there is a hefty number of major pros as well as cons surrounding this issue.
- Economic Prosperity: Higher salaries means increased spending on goods and services. An upwards trend in consumer confidence would lead to more capital streaming into the economy, and therefore, economic prosperity.
- A Livable Wage: When the minimum wage is not keeping pace with the cost of living and inflation rates, impoverished workers bore the brunt of the damage. However, if the minimum wage is updated to progress alongside these two factors, a livable wage is likely to be achieved.
- Decreased Government Reliance: If less people are reliant on social and income-support programs, a country could save a profuse amount of money that they would normally spend on upkeep for these programs.
- Improved Employee Morale: A boost in wages translates to a subsequent boost in employee morale and productivity. When people are happy with their job and their earnings, they are more likely to put more effort into their work.
- Increased Layoffs: Since the largest operating expense a business will have is often human resources and employees, employers with tight budget restrictions will have to fire more people or may even go bankrupt if faced with increased salary expenditure.
- Price Increase: As mentioned, some businesses and companies will lose money due to paying extra to their employees. They would need to compensate for this with a product price increase that would hopefully balance out their losses.
- Incentive to Outsource: If companies in developed countries cannot afford to keep up with the minimum wage raise, they may turn to outsourcing labour to places where minimum wage rates are lower. This may raise an ethical dilemma involving businesses taking advantage of labour laws in underdeveloped countries.
Ultimately, raising the minimum wage has its positives and negatives — it all depends on your situation. A small business owner with multiple employees probably would not want the minimum wage to rise, however a single parent working two minimum wage jobs definitely would.