The federal minimum wage has always been a bone of contention. There are millions of people who support an increase in the federal minimum wage and there are millions who are opposed to such a move. The proponents and opponents have their share of arguments and you cannot just discard either rationale.
Any minimum wage increase would have an immediate impact and far-reaching consequences. Some of the eventualities will be very pleasant and certainly are desirable but there are some concerns that might create troubles for many.
List of Pros of Minimum Wage Increases
1. An increase in minimum wage would help millions of families to earn a little more and many could rise above the poverty line. It is estimated that almost a million people would be above the poverty line if the minimum wage is increased to $10.10 an hour. Doing something good for a million people is certainly the right thing to do. Without the increase in the minimum wage, a million people would continue to just strive and be at the mercy of the companies and their executive decisions on if and when their wages would see a hike.
2. An increase in minimum wage will not only affect those that are working at low wages but their entire socioeconomic condition and thus there would be larger ramifications. It is being said by proponents of minimum wage increase that people earning low wages would start spending more when they earn a bit more. This increase in spending will help the economy and many companies would actually benefit. The livelihood of low wage earning families will be better and that would allow them to be healthier. Healthcare costs might go down a tad if more people are healthy and free of ailments. An increase in income doesn’t always contribute to better health but it certainly has a possibility, something many opponents of minimum wage increase fail to endorse.
3. A hike in minimum wage would attend to bridge the gap of income inequality. The gap has been widening for many years now and there is stark contrast between well doing Americans or prosperous citizens and those who are earning barely to survive or living from one check to another. An increase in minimum wage would thus be a good social move and it is also the right thing to do morally.
List of Cons of Minimum Wage Increases
1. A hike in minimum wage would have an immediate impact on the employment scenario. All of a sudden, many companies would rethink their hiring policies and would rework the numbers they need on their payroll. There is an estimate that infers a loss of half a million jobs if there was a rise in minimum wage. Looking at it from a statistical perspective, more than sixteen million people will earn more and half a million will lose their jobs.
The scales are quite complicated and it is thus very difficult to be in favor or against. Who and what is more important, the fact that sixteen million people will live a little better or the reality that half a million people will lose their source of income and thus livelihoods? It is a scary question. For the slight betterment of many people, the basic foundation of some people’s lives cannot be put at risk.
2. The economy may take a hit if minimum wages are increased. Many companies would reconsider their business expansion plans. They would be squeezed for funds if they don’t make substantial profits and many businesses may end up shutting shop. Companies that are doing very well can afford to pay a bit more but there are innumerable small to medium and even some large companies which will not be able to afford an increase in minimum wage.
3. There is always a tussle between having more jobs and earning more. It is obvious that the more money a job pays, the less available it is or the more uncommon it is. With wages remaining low, there can be more jobs. With wages being hiked, there would be fewer jobs. Not only would some people lose their present jobs but future jobs would become scarcer.
The Bottom Line
The minimum wage increase pros and cons is a very tricky debate and it is not as simple as the democrats and republicans put it as. The debate is also not as simple or definitive as the budget office report puts forth. There are only estimates and even those are based on uncertainties or realities that are beyond the control of any and sundry. No one knows what the eventual impact would be. Some companies already pay more than the minimum wage to their employees but that’s a business decision. Not all companies would be able to sustain that.