The federal minimum wage has not increased above $7.25 since 2009. Lately there has been a lot of controversy surrounding this issue. Many people have demanded an increase to $15 per hour, to make what they call a livable wage. While the minimum wage should be raised a little, it should go nowhere near that high.
If minimum wage were to increase to $15 dollars per hour, or higher, the cost of living would skyrocket. Employers would have to raise the price of their products to compensate for what they would be losing by paying their employees so much. They would literally be paying their employees more than double what they had been. This might even lead to businesses employing fewer people.
According to a study published in the American Economic Review, a 1 percent increase in wages can lead to an employment decrease of anywhere from 0.3 to 1 percent. Now imagine the decrease in employment from raising more than doubling the current minimum wage.
Some restaurants in New York, which has seen its minimum wage steadily rise in recent years, have been cutting staff or eliminating positions, such as busboys, to be able to meet the new minimum wage. Kevin Dugan, the government affairs director for the state’s Restaurant Association, recently mentioned the closure of all Papa John’s franchise locations in Rochester, New York, with the NBC affiliate there.
“Unfortunately, we’re going to see that continuing to happen, where if not closing all together, then going to those tough decisions that may cost people jobs. That’s unfortunately the reality of the situation in New York,” Gugan told the station.
Some businesses simply can’t keep up with the wage increase. This causes the loss of job opportunities for many people in the area.
Going to the grocery store would be an even more costly trip if minimum wage is increased by too much as well. A gallon of milk could easily go from $2.50 per gallon to four or five dollars. You might be making more at work, but the increased cost of living would pretty much cancel that out.
Housing costs would increase as well. It’s hard enough to find somewhere to live that is affordable, especially for students, as it is. If rent were to increase, the number of homeless people probably would too.
The people demanding such a large increase aren’t thinking about the negative effects associated with it. They’re only thinking about the here and now. What could I do if I made double my current salary? In the current economy, you could probably do a lot. The economy wouldn’t stay the same though. That is the biggest issue.
The federal minimum wage should not be increased because it would not help anything or anyone. It would just make thousands of peoples’ lives much more difficult than they already are.