With millions of those who enter the workforce struggling to live paycheck to paycheck, explore the pros and cons of raising minimum wage.
You’re the owner of a fast-food chain. You just learned that the federal minimum wage is $15 an hour.
You wonder about your cost overhead going forward. Can you afford to pay $15 an hour to your employees?
Various scenarios run through your mind. You wonder if you should lay off some employees. You also intended to hire more employees. Now, you may have to implement a hiring freeze.
Or, you may install computers to replace some of your employees.
Such a scenario runs through the head of many business owners. And, these are the concerns of critics who oppose raising the minimum wage.
However, many from both sides of the political aisle believe that the current minimum wage of $7.25 is a meager sum.
This article will show you the pros and cons of raising minimum wage. Read further if you want to learn more.
The Benefits
An increase in the minimum wage would give people more disposable income to spend. Therefore, they would put more money back into the economy.
A minimum wage spike would also help employers. As consumers spend, the extra cash goes back to the businesses. Higher consumer demand also forces employers to hire more employees.
And, a wage increase would help workers keep up with rising living standards.
Overall, wages have been stagnant for decades. With that, an increase in the minimum wage won’t help workers catch up to rising costs. It will, however, provide some measure of relief.
The minimum wage hike would also boost the economy in the following ways:
- Boosting economic growth
- Increasing taxable income
- Reducing spending on public aid programs
Many employees who work with minimum-wage jobs must utilize public assistance programs to survive.
This means that many companies rely on the public to subsidize the living costs of its workers.
A minimum wage increase would help workers get off of public assistance.
The Drawbacks
A minimum wage increase could cause job losses. This can be in the form of:
- Outsourcing
- Layoffs
- Automation
An employer could simply lay off its employees to trim labor costs. Many employers contend that they cannot afford minimum wage increases.
Many businesses struggle to get their brand name out there, spending a lot of time and resources. A minimum wage increase could add to the overall burdens that businesses face.
Automation is also an increasing threat to job security around the world. The U.S. could lose 73 million jobs by 2030. Critics contend that an increase in the minimum wage could increase automation.
American workers must also compete with workers around the world in a globalized economy. Therefore, an employer could outsource jobs to other nations with lower wages who use a pay stub creator.
Further, companies may stop hiring practices in light of minimum wage changes. A wage increase could prevent entry-level workers and college graduates from entering the workforce.
Employers could still keep workers but pass on higher costs to customers. This results in unhappy customers, which could hurt the business community.
The Pros and Cons of Raising Minimum Wage
Studies have shown that the effects of raising the minimum wage have an overall positive impact on the economy. People would have more money to spend overall. However, workers may lose their jobs in the event of a minimum wage increase.
When dealing with the pros and cons of raising minimum wage, it’s worth noting that decades of wage stagnation have caused many workers to struggle over the years. However, a wage spike can be a burden to employers.