In today’s economy, it is difficult to support oneself with limited income, explaining why many minimum wage-earning American workers demand an increase in pay and agree with presidential candidate Bernie Sanders that America must increase the minimum wage. Although doing so has appeal to certain workers, many fail to see that an increased minimum wage would only result in the suffering of businesses and a reality in which nobody would benefit.
According to the U.S. Department of Labor, the federal minimum wage is currently $7.25 per hour, but several states have raised their state minimum wages in recent months. In 2014, President Barack Obama issued an executive order to raise the minimum wage for federally contracted workers to $10.10 per hour.
Furthermore, according to a Huffington Post article by Dave Jamieson, presidential candidate Hillary Clinton has recently confirmed that, like Sanders, she would also sign a bill to increase the minimum wage to $15 per hour. This titanic national movement to drastically increase the minimum wage or even double it is largely to provide a living wage, so as to offer minimum-wage workers a way to combat inflation.
However, increasing wages by such large amounts would only cause inflation. In order to stay in business, struggling businesses would have no choice but to increase prices so as to make enough of a profit to pay their employees more. The aftermath of these higher prices will only result in more demands to increase the minimum wage. The inflation caused by increasing the minimum wage would be detrimental to all consumers.
An increased minimum wage would result in significantly higher costs for businesses, and the higher pay could discourage business owners from providing needed overtime for employees. As a result, employees would not be able to earn the additional income from working more hours, and the standard 150 percent hourly pay with each hour over the standard 40-hour work week.
Increasing the minimum wage would increase pressure for business owners, resulting in businesses being able to hire fewer individuals. The Employment Policies Institute describes how more than 50 percent of working-age Americans living in poverty are not employed, which would continue if businesses had pressure to pay unskilled laborers higher rates.
According to Catherine Rampell of The Washington Post and formerly of The New York Times, a plurality of economists in a survey agreed that raising the minimum wage would increase difficulty in finding low-paying employment. If the minimum wage increases, businesses would have exceedingly higher labor costs, thus discouraging the hiring of workers. Legislators should focus on creating jobs, as opposed to controlling America’s capitalistic free market.
If necessary, businesses would replace jobs through automation. In order to stay in business, businesses will have no choice but to eliminate the high new costs of minimum wage employees and instead replace them with automated cashiers. Business Insider’s Hayley Peterson describes how the restaurant chain Bennigan’s states that the implementation of kiosks or automated cashiers by chain restaurants is a “direct response” to the higher labor costs from demands for a higher minimum wage. Similarly, an anonymous McDonald’s franchisee has described how the demands for a heightened minimum wage only results in restaurants reducing employees by 30 percent and replacing them with electronic systems.
Increasing the minimum wage seems to benefit low-wage employees. However, the aftermath of increasing the minimum wage on any level, particularly by drastic amounts, is shocking. Doing so results in inflation, because businesses would have to increase prices in order to provide a greater payment to employees.
Raising the minimum wage also eliminates the ability for hard-working employees to attain often necessary, higher paid overtime hours because of businesses being forced to cut labor costs. Finally, raising the minimum wage discourages business owners from hiring new employees and instead results in job replacement by less costly electronic systems. Although many minimum wage employees continue to protest for increased wages, it would be better for them to be employed with any payment, as opposed to having no job and still having to live with higher prices.
Gabriel Karam, a Bangor resident, is a senior and the Student Council vice president at Bangor High School.