Will raising the minimum wage fix the economy’s problems?
Minimum wage rates have constantly been on the rise in the United States, and there are both pros and cons of these increasing wages. I will target the impact that these changes are having on everyday people, businesses and the economy as a whole. New York’s minimum wage increased from $8 to $8.75 in recent weeks, and many people experienced the changes. Employees who earn minimum wage rates will feel the positive impact of a slight increase in cash per hour worked. This can be a good thing because those employees will now have more spending money, and this can potentially be an economic stimulator in a way. Lower income citizens will also enjoy the benefits of earning some extra cash in support of their families. These seem to all be amazingly positive benefits; however, they do come with a catch.
Increases in minimum wage rates very well may lead to firms cutting employees’ hours in order to save some extra cash. I saw this happen with my own eyes. I work part time for a sports complex located in Brooklyn, N.Y., and I currently earn the minimum wage rate of $8.75. Foreseeing this increase in wages, upper management came up with a plan to cut down on the costs of its salary and wage expenses. My normal work shift of four hours has been decreased to three and a half. The trade-off between higher wages and hours worked seem to offset with the wage growth, and therefore it makes little to no difference for the “average Joe” in this case.
As proliferations in the minimum wage rate continue to soar, we must ask ourselves a simple question: will wages become high enough to that they cause unemployment rate to increase? In a worst-case scenario, businesses with large workforces may need to downsize in order to maintain their profits. This would lead to a loss of jobs for many people out there who need that income to survive. The number of jobs that could be lost is unknown and this uncertainty could be detrimental to the U.S. economy. Everyday spending would decline due to the loss of jobs and this would damage the state of the economy.
There are definitely tradeoffs when dealing with a minimum wage raise. It appears that the negative consequences outweigh the positive ones when looking into the near future. A few more bucks a day may seem to be the answer, but one must think hard and consider possible consequences. These trivial increases may very well lead to a job loss for that “average Joe.” Only in the future will we truly see the full impact of the continuing minimum wage raises, but for now we can only hope for the best.
Feb. 20, 2015