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Imagine if you were living off $15,000 per year. You would have a hard time to support your family and have little extra money to spend on enjoyments. You would most likely not be able to go to the grocery store and buy snacks simply because you like them. You would also not be able to go to a movie or go bowling with your friends for fun. These are just a couple of the enjoyments of living off more than just minimum wage. That is why the minimum wage in the United States should increase in the coming years. There are many reasons why, but the main reasons are to keep up with inflation, raise consumer spending, and to cut government programs.
One of the reasons to raise the minimum wage is to keep families inclined with inflation rates. The United States as a country has not kept up to date with the current inflation rate. The last time the federal government increased the minimum wage was in 2009. The rate was set at $7.25 per hour. This causes a monumental gap in the amount of income and the amount of outcome a family encounters. This decade span from 2009-2019 has had a lot of inflation, but we have not raised the minimum wage with the inflation rates since 2009. The minimum wage has only increased 22 times since it was first introduced (Doyle). Many of the States in the United States have their own minimum wage with most of them being above the federal minimum wage already, but if the states’ minimum wages can increase, so can the federal minimum wage. Once the federal minimum wage is increased, the states will most likely also raise theirs.
Another reason to raise the minimum wage is to maximize consumer spending. Right now, if you are a full-time worker who earns minimum wage, you will only receive $15,000 per year. If minimum wage would increase with inflation, the current rate would be $10.15 per hour. Full time workers earning a wage of $10.15 per hour would earn roughly $21,000 per year. This would be better than earning minimum wage but still not enough to spend money on needed items (‘Raise the U.S. Minimum Wage’). The U.S. economy does not allow a person who earns minimum wage to be able to spend as much money as they want on a product opposed to someone who earns more than minimum wage.
Another reason to raise minimum wage is it will cut government programs. When government programs are cut, it causes the government to use less taxpayer dollars. Workers who earn the minimum wage lean on government programs for financial assistance to survive. If the United States would increase minimum wage from $7.25 per hour to $15 per hour, it would increase over 40 million workers’ wages in the U.S. (Babic). Although the current minimum wage of $7.25 per hour is below the poverty line for a single parent with one child, earning $10 per hour is above the poverty line (‘Raise the U.S. Minimum Wage’). If the U.S. was to raise the minimum wage, it would narrow the gap between the rich and the poor. There would most likely not be a middle class anymore (Smith). According to the CBO (Congressional Budget Office), if we raised the minimum wage to $10.10 per hour, it would bring 900,000 people out of poverty. The poor would benefit magnificently from this (‘Pros and Cons of Raising Minimum Wage’).
Another pro of raising the minimum wage is that it will keep workers employed with the same company instead of looking for companies that pay better. This will reduce business turnover rates and it will cost less for hiring and training processes. The workers will most likely be happy with the company they are with because of the pay (‘Pros and Cons of Raising Minimum Wage’).
In every situation there is always tradeoffs. So, what are the tradeoffs of raising minimum wage? Well, the answer is simple. It could cause currency deficit in some major companies. Those companies are paying more for their workers, so they have less money to spend on technological advances. An estimated 1.3 million workers could lose their jobs. This layoff could affect areas already struggling with high poverty (‘Raise the U.S. Minimum Wage’). There are also tradeoffs on what would be hurt if the minimum wage were to be increased. The increase would hurt small businesses that have small profit margins. This increase would cause employee downsizing and increase cost of goods (Smith). People also speculate that by raising the minimum wage it will cause companies to pass that raise on customers by raising prices. Business may also stop hiring new workers and limit opportunities to new workers out of college. The same businesses might outsource to countries with lower minimum wage standards to produce more jobs. The Government would also have to update the Earned Income Tax Credit (EITC). The EITC is a tax credit for low-income workers. If the minimum wage is increased before the EITC, it would not help all poor families (‘Pros and Cons of Raising Minimum Wage’).
Therefore, the minimum wage in the United States should increase in years to come. There are many reasons as to why the minimum wage should increase but the main reasons are to keep up with inflation, to maximize consumer spending, and to limit the use of government programs. Right now, the inflation rates are higher than the minimum wage. This is causing a domino effect in minimum wage workers. When minimum wage is increased, it will cause workers to buy more consumer products leading to companies’ revenues to increase. This mass spending will bring in revenue across the country. Also, with a minimum wage increase, it will decrease the amount of government programs needed which will decrease tax revenue needed. To all situations there are also tradeoffs. Increasing the minimum wage would give Americans the tradeoff of losing some of their jobs. So, next time you are in a grocery store, imagine how bad it would be living off only $15,000 per year.
Works Cited
- Babic, Mary, et al. “6 Simple Reasons We Should Raise the Minimum Wage Right Now”. The Politics of Poverty, 15 Feb. 2019, politicsofpoverty.oxfamamerica.org/2019/02/6-simple-reasons-we-should-raise-the-minimum-wage/.
- Doyle, Alison. “Should the Minimum Wage Be Raised?” The Balance Careers, The Balance Careers, 15 July 2019, www.thebalancecareers.com/pros-and-cons-of-raising-the-minimum-wage-2062521.
- “Pros and Cons of Raising Minimum Wage”. Toggl, toggl.com/pros-and-cons-of-raising-minimum-wage/.
- “Raise the U.S. Minimum Wage”. Los Angeles Times, 18 July 2019. Sirsissuesresearcher, explore.proquest.com/sirsissuesresearcher/document/2285121088?accountid=44669. Accessed 4 Nov. 2019.
- Smith, Lisa. “The Minimum Wage: Does It Matter?” Investopedia, Investopedia, 12 Aug. 2019, www.investopedia.com/articles/07/minimum_wage.asp.
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