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Mar. 4 2021

Minimum Wage

Minimum wage has been an ongoing balancing act for the government since the

beginning of capitalism in the United States. Over time, goods get more expensive to

produce and transport due to natural inflation. This causes the government to use a

balancing tool known as minimum wage. There are different things that would be

affected by a change in minimum wage: businesses (mainly small and food), job

availability, government assistance programs, general health, and income/spending.

Each’s impact on the community is nearly solely based on economic status and

geographic location making the nation wide minimum wage difficult to master much the

same as a rubiks cube.

A minimum wage increase would cause every minimum wage employee

employer to pay those employees more and more often than not, their managers. This

money has to come from somewhere, and usually said money comes from cutting costs

in other areas. Businesses could do this by possibly finding a cheaper supplier to buy

goods from, or maybe even cutting some less essential employees loose. Businesses

who do not make enough money to offset their new cost of employment would soon

struggle to make profit (Soergel); in the most critical circumstances, some will have to

close their doors due to inability to keep the lights on. A raise would cause a 22 percent
increase in business costs on average (Alexander). A 22 percent increase would mean

consumers will have to pay more for the goods and/or services that are provided. This

proposes a new struggle for businesses to decide to keep employees, to help make

more money, or lay off employees, to cut costs and remain open. To put that into

perspective, if a business’s average monthly cost (rent, insurance, purchased goods,

and cost of employment) is $100,000 and has an average monthly income of $120,000

could be a good strong running business: a 22 percent increase would raise costs to

$122,000 putting a once possibly successful business into the struggle of potential

bankruptcy. Some say that the increase in cost of staying open would soon be offset by

increased consumer spending and higher selling price for what goods are being

produced and a lessened employee turnover rate (Krisberg). Over time business costs

and revenue might reach equilibrium and businesses would soon be profitable again.

The potential hiccup is surviving the down time, finding ways to cut costs and raising

prices to wider the profit margin.

The industry that the world would see the fastest change in prices is fast food.

The majority of fast food workers make minimum wage (this is how they keep costs

down). A minimum wage increase to 15 dollars per hour would raise average product

prices 38 percent and decrease workforce size by 36 percent (Hoar). Say, for instance,

a good burger meal is 10 dollars at the local fast food restaurant; a 38 percent raise

would cause this burger to be 13.80 dollars plus tax. That's a steep price for a burger

meal considering a $13.50 burger from a restaurant is usually larger than a fast food
burger. Around 20 restaurants in 2013 claimed that the new minimum wage increase

could cause their cost to surpass their annual net profit; meaning, for that year at least,

those 20 restaurants lost money (Alexander). Losing money isn't always bad as long as

the business is still trending upward compared to total revenue from the years prior. As

with any change, over time and with enough mass, fast food companies should get out

of debt and start making money again. Do people that often overlook critical things on

orders deserve 15 dollars per hour?

An increase in minimum wage would also affect job availability. If the government

does so, people should expect to see a decrease in minimum wage jobs across the

country (Soergel). This not only affects entry level applicants like teenagers (25 percent

unemployment rate before the increase (Alexander)), but also low skilled workers that

can not find other work causing harsher competition for jobs. The sole purpose of

having a minimum wage is to help those towards the bottom of the economic ladder

(Alexander)... “...American Action Forum and the Manhattan Institute, the institution of a

$15 per hour federal minimum wage would likely be at the cost of 6.6 million jobs.

Meanwhile, the analysis shows that just 6.7 percent of that increase in earnings would

go to workers considered to be in poverty (Hoar).” The people who are supposed to be

helped the most are only seeing less than 7 percent of the benefits from the change. Is

a raise the best way to help the intended recipients?

The opportunity for people to make more money can potentially put said people

in different brackets for different government assistance programs. For example, those
who make less than 130 percent of the FPL (federal poverty level) are eligible for

supplemental nutrition assistance program (snap) and free school meals (Nguyen). To

reiterate, if some made 129 percent before the change and 131 percent after the

change, they are no longer eligible for these programs possibly causing them to pay

more food and things but will be eligible for other programs. Those who make less than

185 percent of the FPL are eligible for WIC (women infants children) and reduced cost

school meals (Nguyen): this proposes the same possible issue as before. Government

systems have become overflowed with people in recent years; covid is partial to blame.

“...higher wage floors could help alleviate pressure on social assistance programs for

the impoverished (Soergel).” Doing so would help federal debt by lowering the percent

of people needing help from the government causing them to be able to put money in

other places.

Effects on health… Although it is a less direct change, it is, nonetheless, an

important factor to consider. General health, much like cost of living, varies state to

state; In some cases, county to county. Increasing minimum wage would decrease the

number of low birth weight and both premature and normal infant mortality among lower

income communities (Nguyen). This also can lower numbers of post birth sadness, both

maternal and paternal. Moreover, this change would decrease premature deaths by 5

percent among people ages 24-44 that make around 20,000 dollars a year (Krisbergh).

Secondly, a raise would provide opportunities for better mental and physical health:

safer homes, healthier food, and better schools (Kerisbergh). This will also lead to better
childhoods and happier families. Lastly, “...47 percent of annual deaths in Kansas City

are attributable to six root social factors, including individual- and community-level

poverty and income inequality,”and life expectancy fluctuates 10 years across Kansas

City zip codes with the lowest income having the highest poverty rates (Krisbergh).

Health cost and availability may not be the most pressed concern, but shall never be

overlooked for it is extremely important.

Last, but cirtainly not least, income and spending: the back end of the change.

When people have more money, they will spend more money and expect better things

and/or value in return. An increase of $2.85 would lift 900,000 people above Federal

Poverty Level (FPL), and up to one-third of non minimum wage earners would see

increased earnings (Nguyen). This implies that for every whole dollar change, 315,789

people will be lifted above the poverty line. While others argue minimum wage should

be indexed to inflation, for the reason that $9.25 goes slightly further in 2009 than it

does in 2020 (Soregel). Aforementioned, this raise in consumer annual salary would

instantly cause increased spending ,in theory, countering negative effects of the

change. If fast food workers should exped around a $5 raise (proposed to be desperced

incrementally over the course of a few years), will other workplaces raise the wage of

those who aren’t minimum wage earners or their managers?

The intended and unintended outcomes and effects on people and businesses

vary largely across the country and the socio economic spectrum. Change and growth

over time has positive and negative effects that follow. There are different things that

would be affected by a change in minimum wage: businesses (mainly small and food),
job availability, government assistance programs, general health, and income/spending.

Nobody will know the true outcome until months after if or when the change is

implemented. The change will be good or bad, but the original question remains; Is a

raise what's best for the intended recipients?

Alexander, Lamar. “Should Congress Increase the Federal Minimum Wage and Index It
to Inflation? (Cover Story).” Congressional Digest, vol. 92, no. 5, May 2013, pp.
17–19. EBSCOhost,
search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=87086141&site=eho
st-live&scope=site.
Bernstein, Jared, et al. “How Minimum Wage Increase Would Impact on Women.”

Hispanic Times Magazine, vol. 21, no. 2, Mar. 2000, p. 12. EBSCOhost,
search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=3032323&site=ehost
-live&scope=site
HOAR, WILLIAM P. “Minimum-Wage Hikes Maximize Economic Woes.” New American
(08856540), vol. 34, no. 20, Oct. 2018, pp. 41–43. EBSCOhost,
search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=132390447&site=eh
ost-live&scope=site
Krisberg, Kim. “Raising Minimum Wage Good for Public Health, Not Just Wallets.
(Cover
Story).” Nation’s Health, vol. 45, no. 2, Mar. 2015, pp. 1–12. EBSCOhost,
search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=101389982&site=eh
ost-live&scope=site.
Nguyen, Loc H. “The Minimum Wage Increase: Will This Social Innovation Backfire?”
Social Work, vol. 63, no. 4, Oct. 2018, pp. 367–369. EBSCOhost,
doi:10.1093/sw/swy040.
Soergel, Andrew. “24 U.S. States Will See a Minimum Wage Increase in 2020.” U.S.
News - The Civic Report, Jan. 2020, pp. C16–C19. EBSCOhost,
search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=141024862&site=eh
ost-live.