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Raising The Minimum Wage: A Counter Intuitive Solution

1026 words - 5 pages

While some believe that raising the minimum wage will resolve poverty issues and lack of pay with the signing of legislation, the raising of the minimum wage to $10.10 an hour (as advocated by President Obama and the Democrats) would cause the poverty issue to be worse than it already is; inflation would occur, employees would be laid off, and minimum wage employees would lose welfare benefits, thus offsetting the wage increase. The Government should consider the effects on the American economy as a whole, as opposed to just considering the wage at which certain individuals are paid.
While some might argue that raising the minimum wage would provide for a 'living wage', the raising of the ...view middle of the document...

The result of a minimum wage increase in an establishment such as a supermarket, which serves a basic human need, would not be a positive thing. If the Kroger Company were required to pay two to three additional dollars in operating costs, the effect on cost of living would have a negative effect, thus being counter-intuitive to the minimum wage increase. If only 2.9% of American workers work on the minimum wage (Sherk), is it worth raising their wages only to increase the cost of living for everyone else?
While many argue for a minimum wage increase in order for a 'living wage', not having employment as a result of a minimum wage increase would strongly demonstrate a counter-intuitive effect. According to the non-partisan Congressional Budget Office, a $10.10 federal minimum wage would mean a net loss of five hundred thousand workers in the American workforce (Congressional Budget Office). In addition, a strong example of this could be seen in July of 2013 when the city of Washington, D.C. talked about raising their minimum wage, and Walmart strongly disapproved of this. Walmart, considering setting up shop in D.C., threatened to abandon its presence in D.C., should the minimum wage be raised (Tull). As a result, DC missed out on a chance to gain several jobs for its people, but this did not occur because of a minimum wage increase. Basically, supporting the raising of the minimum wage as a result of poverty is incomparable to the amount of jobs that would be lost as a result of an increase.
While many cite poverty as a reason for raising the minimum wage, the raising of the minimum wage would cause many to lose welfare benefits and tax credits, thus demonstrating a counter-intuitive effect. Poverty and income inequality are both terms one can often hear today out of politicians' mouths. Liberal politicians argue that raising the minimum wage would be a positive solution to both these issues; however, according to the Heritage Foundation, 'American tax and welfare programmes claw...

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