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Against a minimum wage increase

According to Merriam Webster, the definition of minimum wage is: “Living wage, the lowest wage paid or permitted to be paid.”  In the U.S., the current minimum wage is $7.25, the lowest amount of income an employer can provide an employee for work. The issue here is that some argue that the current minimum wage is not sufficient to support the cost of living. The current minimum wage needs reform, but should it be increased by 200% to $15? Raising the minimum wage drastically could be harmful to small businesses and the American unemployment rate.

The current minimum wage gives businesses an appropriate range of pay based on requirements to work there. For example, someone who works at a snow cone stand versus someone who is a pipeline welder would likely have a significant pay difference because these jobs require different work levels, and therefore, different levels of income for the individual. A snow cone stand and the pipeline would also bring in dramatically different profits for the job done. It’s possible the pipeline company could bring in enough money to pay its workers $15 an hour, but if a snow cone stand had to pay employees that much, it’s likely the business would not survive. It’s all in the perspective of the job being done.

A local small business owner, who wished to remain anonymous, provided some statistics on her business income and how the minimum wage increase would affect her business. The business brings in about $4,000 monthly, with two employees who are both paid $8.50 an hour at an average of 26 hours weekly. This means that monthly, around $1,800 goes to payroll, leaving $2,200 in profit. That does not include leasing or other finances. If the employer were required to increase the employees to $15 an hour, payroll would be $3,120 leaving $800 in profit, not including lease or other finances. To continue to bring in enough profit for the business to remain open, the employer would have three options: let someone go, decrease hours, or raise the cost of the product sold. Increasing product cost is likely to turn away customers, cutting hours will not bring a solution to the original minimum wage crisis, and letting someone go leaves 50% of the workers employed at this business jobless. These statistics, which are strictly for this small business, show that in raising the minimum wage, nothing has been solved.

A former owner of a computer software company, who will also remain anonymous, gave his input on the minimum wage increase. 

“If I increased my minimum wage employees to $15 hourly, I’d also have to increase the income for my more qualified employees. Otherwise, someone at base level is getting paid the same as someone who is more qualified and takes on more responsibility. The only way to keep the business going at that rate would be to let go all minimum wage employees and give the more qualified employees extra responsibility, which would leave people who actually need minimum wage jobs unemployed,” he said.

Additionally, nobody is forced to accept a job offer. If people decide the income offered by a business would not provide enough to live, they may decline the offer and continue the job search. Somewhere else will pay more. It may require more work, education, or experience, but there are other opportunities. 

Increasing the minimum wage so drastically takes the choice out American business owners’ hands, which will likely cause an uptick in the unemployment rate. The minimum wage probably should be reevaluated to accommodate the modern cost of living better. However, such a drastic increase would not solve the minimum wage crisis and could potentially do more harm than good. 

Economist Thomas Sowell said, “there are no solutions, only trade-offs.”

by Ashton May

Results based on a survey conducted with Jones students April 19-23, 2021

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