Impact of Raising the Minimum Wage to $15 on Cost of Living

Introduction

The debate surrounding the increase of the minimum wage to $15 per hour has persisted for years, with proponents arguing that it is necessary to address income inequality and improve the quality of life for low-wage workers. However, critics contend that such an increase may harm businesses and lead to higher costs for consumers. This article explores the potential implications of increasing the minimum wage to $15 on the cost of living and overall economic impacts.

Raising the Minimum Wage and Business Expenses

The immediate effect of raising the minimum wage to $15 per hour would be a significant increase in business expenses. According to economic analysis, this hike would exponentially increase the cost of doing business. Businesses are likely to pass on these increased costs to consumers in the form of higher prices, leading to a general escalation of the cost of living.

It is important to note that while some may argue that a high minimum wage is a lose-lose situation, benefiting only tax collectors, this view oversimplifies the complex interplay of economic forces at work. Increasing the minimum wage may indeed have unforeseen negative consequences, such as driving businesses out of the market or increasing unemployment rates. For many workers, having a lower-paying job may be better than being unemployed.

Additionally, the idea that all people would receive the same percentage of pay increase every year is a misconception. Inflation, which averages around 3% per year in the United States, is the result of the average of all pay increases. Currently, 600,000 people earn the federal minimum wage, making up a small portion of the overall workforce ranging between 115-160 million.

Effects on Cost of Living

Raising the federal minimum wage to $15 per hour would indeed increase the cost of living for everyone. This increase would not solve the underlying issue with companies paying fair wages. Instead, it may lead to negative impacts, such as:

Layoffs: Shareholders and business owners are not likely to reduce their income in favor of paying higher wages. This could result in businesses laying off employees to manage the increased costs. Rising Consumer Prices: It is more likely that companies would opt to raise prices, passing the increased costs onto consumers. This would contribute to a more widespread increase in the cost of living.

Increasing the minimum wage to $15 is only addressing the symptom of a much broader economic issue. The root problem lies in the greed and global competition that have created a race for the lowest prices with the highest profits. Values within the business world need to shift towards viewing employees as assets rather than disposable commodities for profit.

It is crucial to recognize that the current market value of the minimum wage does not guarantee that businesses have to pay employees more. It is equally important to consider that companies have the means to offer better healthcare and retirement benefits but often choose not to due to financial considerations. Choosing not to pay a livable wage is not ethical, especially when it is clear that they could afford to do so.

Conclusion

The increase of the minimum wage to $15 per hour is a complex issue with both positive and negative implications. While it can improve the livelihoods of low-wage workers, the significant rise in business expenses may result in higher consumer prices and potentially negative economic consequences. Ultimately, a fundamental shift in business values is necessary to address the underlying issues of income inequality and the cost of living.