There have been a variety of opposing expectations surrounding the minimum wage increase amongst hourly workers and owners since early 2014. Employers have been dreading the impending minimum wage increase that was introduced a few years ago, while a minimum wage increase is music to the ears of those who depend on minimum wage paid jobs as their sole source of income. Here, we’ll discuss 10 major pros and cons of a minimum wage increase that many people aren’t prepared for.
Our economy has been on a complete roller coaster ride the last 10 years and we’ve seen numerous changes for the good and bad occur since. No matter what political stance people take, it’s evident that we’re all in need of a serious economic change in the upcoming year. With a new election on the rise, many people’s concern is the value of the U.S. minimum wage increase and what it means for their business and tax dollars.
The first time we heard the minimum wage would get a significant increase was in 2014 when President Obama announced he would be raising the minimum wage 40% from just $7.25 per hour to $10.10 per hour. Now that has changed even more since California has promised to raise their minimum wage to $15.00 per hour by 2020 leaving other states with the notion that they should consider raising their minimum wage to help support their state’s residents and economic growth too.
Here are some things to consider about the rising minimum wage you might not have thought of and some things you can take away in order to help your business through the ever growing change of a new political season.
The Pros of a Minimum Wage Increase:
Let’s start off on a positive note and look at the pros of a rising minimum wage first.
- The initial raise would, in fact, help support a growing economy and would make minimum wage paid jobs more appealing to new workers and current workers. Which is incredibly important since minimum wage paid jobs play an important role in daily services and are found in businesses that we all rely on each day. Without good workers in these jobs, the consumer experience would plummet and so would the businesses that employ minimum wage paid workers.
- The appeal of minimum wage paid jobs would also spike a large amount if the raise goes up to $15.00 in other states. People who may not normally consider applying for minimum wage jobs may be more likely to do so which may mean that individuals with a higher education lean towards a large variety of jobs, including those that pay the minimum wage.
- This means we would have a greater diversity in places of employment and possibly better service as a result of more educated people filling those positions. There would also be less of a turnover in minimum wage paid jobs if people more were content with their place of employment’s wage. Or, it may simply improve how a worker performs at their job because they feel happier at their place of employment, no matter what their former education experience is.
- A higher minimum wage may also help empower the growth of a community, city, and state by becoming more attractive for individuals from other states. If people move to a certain location because it offers a well-paid (minimum wage) job with even the slightest amount of benefits, the growth of that location would slowly but surely rise improving the economy over time.
- Minimum wage jobs would also stimulate a more thriving economy by encouraging people to spend more and therefore help the surrounding economy thrive. After all, if people make more, they spend more—or at least that’s the theory behind the possibility of a minimum wage increase.
- Finally, people may rely less on social programs for economic support and be more able to support their families and themselves on their own. This not only empowers those individuals but also reduces expenses in the entire state.
The Cons of A Minimum Wage Increase:
Of course, with the good news, there will always be some bad news. Now, let’s take a look the cons of a minimum wage increase.
- One of the most concerning cons of a minimum wage increase is the risk of layoffs and terminations. Companies may hire more people than they can afford, or their business may not grow as fast as they are able to pay their employees. Both of these can lead to layoffs which help no one in the end and can lead to more people applying for unemployment.
- Customers may also pay for an increase in the minimum wage. The cost of the products or services people are providing may go up to meet the demands of a rising minimum wage. With food cost spikes already occurring within the last 10 years, no one wants to see the cost of their other goods and services go up too.
- Companies may also be less likely to hire enough people to support their business because they fear a profit loss from a rising minimum wage, especially small businesses who are just starting out.
- No one can project how their business will succeed and employee payroll systems are a large part of a business’s bottom line. This problem may lead to fewer jobs available despite that they all pay well; it will also heighten the competition for jobs that are available that pay the minimum wage.
The Bottom Line:
One thing to consider is that no state’s minimum wage will likely ever be the same nationwide. All states vary their wage depending on their economy and their state’s populations. This creates a consistency that may not allow people to move more freely from one state to the next if they desire to or need to for employment purposes.
There is still a large diversity in the minimum wage between all states but what most everyone can rely on is that their state will raise the minimum wage at some point within the next year if they have not done so already.