The Positive and Negative Effects of Raising Minimum Wage

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A sensitive topic for many Americans is their income. Many people’s income relies on minimum wage. In 2012, 3.6 million people received an hourly pay at or below minimum wage. There is an ongoing debate in government as to what the minimum wage should be. Stuck at $7.25, Obama has suggested raising the minimum wage to $9.00. Depending on a person’s perspective, raising minimum wage could be positive or negative. Minimum wage has the ability to change lives, and change the economy. Small businesses and unemployment, teenage demographics, and the cost of civilian goods would be most affected.The only mystery is whether things would change for the better or for the worse.
Many areas could be affected by a change in minimum wage, but potentially the most drastic change would be to unemployment. Advocates of a higher minimum wage insist that a raise would significantly decrease the unemployment rate in the United States and improve the quality of living. However, there are conflicting opinions on this. Higher minimum wage would mean higher labor costs for business owners, thus making it more difficult for employers to maintain the amount of workers they have, let alone add new employees. Raising the minimum wage does not increase the value of the worker's labor; it increases the cost of the worker's labor. As a general rule the more something costs, the less of it people will buy. This is true of not only consumer goods but also of workers in the labor market.Many jobs come from large corporations but they also come from small businesses.There are 23 million small businesses in America, accounting for 54% of sales and 55% of jobs. Raising the minimum wage means that all of these corporations and businesses will have to dig deeper into their checkbooks. Many places can’t afford these added expenses, which would result in a decline in jobs. The higher labor costs could potentially lead to future job cuts to make up for this increased expense. The money to pay for an increased minimum wage has to come from somewhere and there are only a few places that it can come from. The extra money could come from the company’s investors, in the form of lower profits; customers, in the form of higher prices; or workers, in the form of fewer jobs. Since the marketplace is very competitive, businesses will resist lowering investors’ profits and raising prices for customers because of the potential risk of losing them. This leaves only providing fewer jobs as a way to get the money they need to afford an increased minimum wage.There are always exceptions, but historically, businesses have financed increases in the minimum wage by laying off minimum wage workers.If this was to happen, the national unemployment rate, currently stuck at 7%, would skyrocket. This would be detrimental to low income Americans.Instead of helping low income families, many could end up losing their source of income. As time goes on, the unemployment should lower, but...

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