The Consequences of Raising the Minimum Wage
Minimum wage is the “legally mandated price floor on hourly wages.” (Minimum Wage par 1) Minimum wage at the federal level is currently 7.25. Each state can raise their minimum wage, but it cannot go below the federal level of 7.25. About “3.3 million people are at or below the minimum wage level.” (DeSilver) Most of those workers work in restaurants, retail and as cashiers. Half of the people who making minimum wage are under 25 and 64% work part time. There are people who believe minimum wage should be raised.
Many Americans believe minimum wage is too low for the standard of living. Many proponents claim that increasing the minimum wage would decrease poverty. In recent years “studies have indicated that raising the minimum wage to $10 an hour would increase paychecks for North Carolina’s workers by $2 billion a year.” (Freyer) Another popular belief is an increase in purchasing power would follow the increase in minimum wage, meaning your dollar could buy more than it used to. Minimum wage needs to be adjusted to inflation. Even since 2009 “the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power” (DeSilver) Some people even claim raising minimum wage will lower crime rates. Statistically speaking people of poverty commit more crimes. The thought process is with the increase of the paycheck and increase in employment the crime rates will go down.
However, they fail to see the consequences associated with a raise in minimum wage.
Increasing the minimum wage would in fact increase poverty. If companies had to pay more money for jobs they were willing to pay minimum wage, they would be forced to lay people off. Raising the minimum wage to “$10.10 wo...
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...on to the increase of prices, unemployment will also cause crime rates to rise. Unemployment rates work hand in hand with price increases to raise the crime rate “The unemployment rate influences burglary and motor vehicle theft, while real minimum wage influences murder, robbery, and grand larceny.” (Corman & Mocan)
These factors work together to cause an overall depression and increase in unemployment. Increasing the minimum wage might not bring us back to the Great Depression however, it will severely impact the economy negatively. Unemployment rates will soar sky high. Companies will pass on their increased labor expenditures onto the customer. Everyday necessitates will become more expensive, making them available for less people. Some people will turn to crime to provide for themselves or their family. This can all be prevented by not raising the minimum wage.
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