Is raising the minimum wage a bad idea?
Raising the minimum wage from $7.25 up to $9 could be a recipe for disaster, according to the National Federation of Independent Business’ chief economist, Bill Dunkelberg.
Obama’s proposal to increase the minimum wage as a means of boosting the economy sounds good at first, but when you begin to dig deeper there are a number of reasons to be concerned.
What could happen if the proposal passes?
Bill Dunkelberg states that if the minimum wage is increased there will be a number of negative outcomes, such as:
More unemployment – if minimum wages increase many business owners across the country will have to cut their workforce to keep paying their employees that have higher wages. In addition, businesses will seek ways of reducing the need for labor by using technology.
Fewer job opportunities – with fewer minimum wage jobs available, young people and new workers will have a harder time finding a job.
Costs will rise – as the cost for labor increases the costs for goods and services also increases. Consumers are less likely to purchase products that cost more.
Dunkelbarg says that these are all part of a “irrefutable law of economics” where “the higher the price of anything, the less will be taken – this applies to labor as well as goods and services.”
Obama announced the proposal in his 2013 State Of The Union Address, he said that “no one who works full-time should have to live in poverty.”
A report by the Brookings Institute revealed that raising the minimum wage would increase annual earnings of low-income households by only 7 percent, jumping to $11,828 from $11,047 on average.