Would raising the minimum wage actually help the American economy? Some people believe it would take people out of poverty. Others think that it will make it easier for people to supply for their families. Many believe that it should have been raised with the price of inflation over the years. While any of these reasons might be true, there are still many consequences that could take action if minimum wage is raised. Most Republicans are completely against the idea of raising it while President Obama would like to raise it from $7.25 an hour to $10.10 an hour. Raising the minimum wage would cost jobs, place people in higher tax brackets, inflate prices, and create greater competition for jobs.
Raising the minimum wage would cost jobs. First, I would cost more money to hire low-skill workers. Second, businesses would not be able to afford as many workers because they would be paying them so much. The Congressional Budget Office has stated that raising it to $9.00 an hour would cause a loss of 100,000 jobs. Raising it to $10.10 an hour would result in 500,000 jobs lost. (See Figure 1) Losing jobs is a serious issue because the unemployment rate would rise. This makes it harder to lower an unemployment rate because you have just raised it. Less people would be able to find jobs as well.
When it cost more money to hire low-skill workers, businesses suffer. For example, fast-food chains rely mainly on low-skill workers. This would force restaurants, like McDonalds, to pay someone $10 an hour just to flip burgers. Brian Brenberg states, “The end result is that it will be harder for students like mine to land that first job and acquire those skills that lead to upward mobility.” (Brenberg) Plus, a White House graph reports 44% of minimum wage workers are unmarried and without children. This means they are not supplying a household and most likely have little skill. (See Figure 2)
Businesses also cannot afford as many workers when there is a higher minimum wage. For example, a business with fifty workers being paid minimum wage would like to expand the company. They cannot because now they have to pay those other fifty employees more money. Annie Lowrey says, “Businesses might then reduce their use of low-wage workers and shift their spending toward other things, automated systems. (Lowrey) A study done by Express Employment Professionals says that 54% of employers paying their workers the current minimum wage would reduce hiring if it is raised. (See Figure 3) Losing workers would be crucial to businesses big and small all over the country.
Second, this increase results in people being placed in higher tax brackets. People being placed in higher tax brackets would result from a higher income. Also, tax rates could change because more money is being made. People would be at the same place they were at before minimum wage was raised. This would make the entire increase a pointless action.
As your income increases, you could change tax brackets...