Please note! This essay has been submitted by a student.
“No family gets rich from earning the minimum wage, in fact, the current minimum wage does not even lift a family out of poverty” (Corzine). Richard V. Burkhauser, author and Professor at The University of Melbourne, published Minimum wages and Poverty: Will a $9.50 Federal minimum wage help the working poor. The motivation of helping the working poor was a key factor in raising the minimum wage back in 2007 under The Minimum wage earners act, which has since increased to $9.50 an hour. There is a large amount of evidence that shows steep raises in the minimum wage will hurt minimum wage workers. The government raising the minimum wage among low-skilled workers will push millions out of poverty, however, increased labor costs could counter these positives.
Raising the minimum wage among low-skilled jobs is an effective idea. Raising the minimum wage will reduce the poverty rate immensely. According to an article by Forbes, this number could be close to almost 3 million families who fall below a certain level of income, lifted out of poverty. On top of this, an increased wage for minimum wage workers means that more of the family’s basic needs are being met. Food, Shelter, bills are just a few of the essentials that some families living in poverty cannot constantly keep up with the costs that go along with these items.
Increased wages among minimum wage workers would lead to increased leisure spending, which could in turn, help these, businesses and the overall economy if more Americans are available to be spending more on consumer goods. Some of these leisure activities could be classified as dining at restaurants, golf, a new tv. Purchases such as these would boost sales in different areas of the market.
Americans under the poverty line rely on food stamps and other welfare checks to financially aid a family. Raising the minimum wage for low-skilled workers would almost eliminate the need for food stamps or welfare checks among Americans. Welfare checks and financial aid take up an extremely large portion of the US government budget. According to The Washington Post, that number is almost 1 Trillion dollars, every year.
Like every economic issue, there are always two sides to an argument. Many people believe that the disadvantages of raising the minimum wage outweigh the advantage; Here is why. Companies stay in business when the profits constantly outweigh the costs. Raising the minimum wage would require businesses to pay that extra few dollars to each employee, which could be devastating to smaller businesses with a tight budget. This is the point where companies would have to lay off employees to pay for the increased minimum wage among their workers. Earlier I stated that raising the minimum wage would bring almost 3 million families out of poverty; that statistic is true. However, raising the minimum wage will hurt the employees laid off. The number of employees who would lose their jobs due to companies who cannot financially afford to constantly pay workers estimates around 3 million workers without a job (Forbes.com).
Another major issue with increasing the minimum wage is the possibility of companies outsourcing jobs to other countries with a smaller minimum wage or none. Companies who cannot afford to pay the employees these increased wages would have the option to either, lay off employees, outsource jobs, or face severe federal consequences. Outsourcing jobs would force employees to move wherever the company is or leave the company entirely. Outsourcing jobs and services would take a major hit on the United States economy.
Raises in the minimum wage would mean that low-skilled workers are now making as much as experienced workers, such as supervisors and admin. This ultimately means that these higher-level manager jobs would need to be raised as well. Researchers have shown that raising the minimum wage could very well increase high school dropouts. Students knowing that even without a secondary education they can still make enough money to stay above the economic poverty line may unmotivated students in school. Increasing the number of unskilled workers in the workplace, and the high school dropout rate would skyrocket.
After reading over and researching both sides to the argument along with statistics and studies were done on the effects of minimum wage, I agree with the side of we should not increase the minimum wage currently. While having a wage increase would bring almost 3 million families out of poverty, doing this would have the same adverse effect putting almost 3 million out of a job with companies trying to stay within a budget. The only logical reason for raising the minimum wage is to help out the working poor, therefore decreasing the number of families living in poverty. On the other side, there are many downfalls to this idea. First off, the workers laid off because of the inability of a company to pay each of its workers the increased minimum wage would then fall below the poverty line, putting almost as many Americans without a job below that low-income state getting us right back to where we started. Companies outsourcing jobs threaten the United States economy and those workers who work within the companies. I believe that the consequences of raising the minimum wage greatly surpass the benefits of raising the minimum wage. If we put almost 3 million people out of a job just to give 3 million families a chance to lift themselves out of poverty, we are not doing the right thing.
The controversial topic of the wage of low-skilled workers has been a hot topic for many years. Many Americans are for raising the minimum wage, which is contrary to my opinion. They do not realize what devastating consequences raising the minimum wage would be, even though the goal is to help. Each American should really look at what the effects of raising the minimum wage would be, and there are some definite drawbacks.