Benefits and Disadvantages of Raising the Minimum Wage to $15

1944 words (8 pages) Business Assignment

10th Jun 2020 Business Assignment Reference this

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Abstract

In the past decade, many Americans and politicians have been pleading for a minimum wage increase to $15. Raising the minimum wage to a higher amount will benefit some, but it will hurt many. Understanding what will happen if the minimum wage is increased is very vital to pleading to have it be raised. The benefits will show readers that it may help people in stages where they are stuck. The disadvantages will show the impact on the economy and businesses. Although both sides have good arguments, Raising the minimum wage will have a lasting impact on the society.

Everyday Americans are working very hard to make a living. People of various ethnicities and race are working at a multitude of jobs earning an hourly wage. For some, it is difficult to thrive in this growing economy. For others, making money has never been a problem. Making money is the average Americans top priority to enjoy life. In order for someone to be successful, they must work until they grow old. Once they grow old, they usually run into health problems and have to spend all the money they saved.

The minimum wage has been around for a very long time. In the past decade, it has been a very hot topic. The argument is if the government should raise the minimum wage to $15 or not. The minimum wage has not been raised in years so some states have taken action to do it themselves. In this paper, the focus will be on two main questions:

  1. What are the Benefits of Raising the Minimum Wage to $15?
  2. What are the Disadvantages of Raising the Minimum Wage to $15?

As our economy continues to grow, many ideas come to mind and it is important to fundamentally understand where these ideas lead to. This paper will outline the benefits and disadvantages of raising the minimum wage to $15.

What are the benefits of Raising the Minimum wage to $15?

There are many benefits to raising the minimum wage. This next section is going to talk about how raising the minimum wage can produce good outcomes. Although there are many counter arguments to each benefit, this section will only focus on what good can come from it and why that good brings forth a better economy.

Benefit 1: It would make raising a family easier.

Families across America have struggled to maintain steady income and good jobs. When a person thinks of someone working at a job with an hourly wage, they most commonly think of a high school or college student.  Raising the minimum wage sounds like a great idea if someone is a student working full time. It sounds even greater if someone is raising a family and working at an hourly job. Most people who work hourly wages are indeed adults. According to the New York Times Upfront (2015), “Almost 90 percent of Americans who get paid at or just above the minimum wage aren’t teenagers looking for an after-school job. They’re adults over the age of 20, trying to earn a living” (Is it time to raise the minimum wage). It is very sad to see men and women are getting paid less than $10 an hour as an adult. This makes raising a family or paying bills impossible without working 60 plus hours a week. In the same article Gillibrand states, “The last time the federal minimum wage went up was in 2009. Since then, basic expenses like food, rent, and public transportation have shot up–some by double-digit percentages.” (Gillibrand). It has been 10 years since the federal minimum wage has increased! The amount of money that a person needs compared to how much they make is not balanced.

Benefit 2: It Would Lift People Out of Poverty.

Today America has a lot of people living off food stamps and welfare. For a first world country, people should not have to live in such a way to where they cannot provide for one’s self. According to the U.S. News & World Report (1996), “The poverty line for a family of four today is $15,600. Even with food stamps and tax credits, a full-time worker earning the minimum wage lives below the poverty line” (Raise The Minimum Wage?). Raising the minimum wage may not only help raise these families out of poverty, but it will also encourage drive in American citizens. Businesses in America do not like paying their employees a good amount of money. J. J. Phillips (2005) shares strategies business owners use:

This strategy invests the very minimum in employees in every aspect of employee expenses: it sets salaries near the minimum-wage level or very low in the industry, provides benefits at a level just beyond what is legally required, invests in training only at the job skills level with almost no development and preparation for future jobs, and offers little in the way of employee-support services. (p. 30)

The goal of every business is to make a lot of money. Many businesses like to “invest the minimum” or pay the lowest wage possible, in order to maintain a high profit. This is very unfair to many people and causes many to struggle financially (Phillips 2005, p. 30). If greed wasn’t the high priority, then maybe there would be no question over raising the minimum wage.

What are the Disadvantages of Raising the Minimum Wage to $15?

The debate over raising the minimum wage goes back and forth. It is tiring listening to politician’s ramble about who is right and wrong. In this next section, this paper will talk about the disadvantages of raising the minimum wage and how it could affect our economy in a negative way if they do so.

Disadvantage 1: Raising the minimum wage will cause businesses to fail.

The idea of making more money sounds great! Raising the minimum wage to $15 would produce an overflow of applications for all types of jobs. This idea seems like it would help our economy grow, except there is a catch. According to Board (2019), “However, some 1.3 million low-wage workers who might otherwise have gotten jobs paying less than $15 per hour would go without employment — and the job-loss figure could go as high as 3.7 million in a worst-case scenario” . When the cost to have an employee is high, the number of employees a business has is low. Businesses would fail because they wouldn’t be able to have enough employees to run the store. If a business did have the number of employees, they would not have enough money to pay for restock or rent if they don’t own the facility. Raising the minimum wage to $15 would cause so many problems and would be worse for the economy than many could imagine. J. J. Phillips mentions “If a company achieves its lower prices by finding better and smarter ways of doing business, then yes, everybody wins. But if it cuts costs by cutting pay and benefits, then not everybody wins.”. Companies want a high demand for their product. For many, the only way to do that is to lower your prices. If a company can’t have low prices because their employees demand too much pay, then their prices must go up and the demand for their product will go down. Minimum wage is a good thing for many businesses. While it may not always be good pay for an adult, there are always ways to get raises, or find jobs that pay more by choice.

Disadvantage 2: It hasn’t worked for states that have already raised their wage.

Today, some states in America have already started raising the minimum wage. A study from the University of California stated “The model suggests that there would be 30,000 fewer jobs in the industry from 2017 to 2022 as a result of the higher minimum wage. Over the period 2013-2022, therefore, the number of new jobs in the full-service industry will grow by 120,000, but would have grown by 160,000.”. This study shows that if you raise the minimum wage, the number of jobs created each year dramatically decreases. Stepman also shares “Nearly 1 out of 10 in areas with a recently increased minimum wage have closed an operation since the cost hike, and 71 percent have attempted to pass along the rise to customers by raising menu prices, according to new research.”. There are many disadvantages to raising the minimum wage and it is something Americans should study before they speak about it.

Conclusion

The war over the minimum wage may not end anytime soon. This paper was made to inform the reader what happens when the minimum wage is raised. Today, politicians and many others have been calling for a raise to $15. This would cause our economy to collapse. Unemployment would rise and businesses would fail. Raising the minimum wage may help some, but it would hurt many. While all men and women love money, they must work hard and give there all. There is no success without hardship. Although that may be hard to hear, it is the truth and will be the truth for a long time.

CITATIONS

Is it time to raise the minimum wage? It’s now $7.25 an hour, and it’s been more than five years since the last increase. (2015). New York Times Upfront, (7), 22. Retrieved from               http://search.ebscohost.com.proxy.kennesaw.edu/login.aspx?direct=true&db=edsgov&A               N=edsgcl.397264430&site=eds-live&scope=site

ANNOTATION: This article talks about why raising the minimum wage is good and bad. The article gives many examples of why minimum wage will be good for our economy by giving real world examples of why our society needs it. The “NO” side of the article gives statistics and economic reasoning on why raising the minimum wage will ruin businesses. Both sides give direct quotes and give pictures of each states minimum wage.

Raise the minimum wage? (1996). U.S. News & World Report, 120(17), 54. Retrieved from               http://search.ebscohost.com.proxy.kennesaw.edu/login.aspx?direct=true&db=mih&AN=              9604227866&site=eds-live&scope=site

ANNOTATION: This article gives separate information from the link above. It shows the pros and cons of having each type of system. It describes what could happen if we raise the minimum wage or keep it the same. It can hurt jobs and hurt families. This would not be beneficial to the American family.

Board, E. (2019, July 16). Opinion | We should increase the minimum wage. Just not to $15               everywhere. Retrieved from https://www.washingtonpost.com/opinions/we-should-              increase-the-minimum-wage-just-not-to-15-everywhere/2019/07/16/83953e94-a344-              11e9-b8c8-75dae2607e60_story.html.

Stepman, J. (2019, May 9). A Higher Minimum Wage Fails in California. Retrieved from               https://www.dailysignal.com/2019/05/07/a-higher-minimum-wage-fails-in-california/.

ANNOTATION: This website talks about the bad things that happen when the minimum wage is raised. It gives studies and good evidence to show that raising the minimum wage can destroy an economy.

ACADEMIC JOURNAL

Lesica, J. (2018). Lobbying for Minimum Wages. Economic Inquiry, 56(4), 2027–2057.  https://doi-org.proxy.kennesaw.edu/10.1111/ecin.12692

BOOK

Phillips, J. J. (2005). CHAPTER 2: Invest the Minimum. In Investing in Your Company’s               Human Capital (pp. 30–41). American Management Association International. Retrieved               from               http://search.ebscohost.com.proxy.kennesaw.edu/login.aspx?direct=true&db=bth&AN=3              2725725&site=eds-live&scope=site

 

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