The Devastating Effect of Raising the Minimum Wage
Raising the Federal minimum wage does not reduce poverty. If legislators raise the price of low and unskilled labor, businesses would reduce the workforce. The very laborers that are pushing for raising the minimum wage are the ones that will suffer the most. An increase in the minimum wage would lead to job loss and may result in higher prices for consumers. Minimum wage increases may result in severe economic devastation.
Recently in New York between ten and fifteen thousand laborers marched in an effort
to persuade lawmakers to increase the minimum wage to fifteen dollars per hour. The majority of those marching were activist ...view middle of the document...
The Wilson Review also noted that on academic study found that both state and federal minimum wage increases between 2003 and 2007 had “no effect on state poverty rates,” the review also stated that the previous increase in the minimum wage for $5.15 to $7.25 only fifteen percent of the workers who were expected to gain from it lived in poor households. Most of the workforce that was earning $5.15 per hour was teenagers working part time. While raising the wage does not decrease poverty, it may result in higher prices for consumers.
The cost of raising the minimum wage must be paid by someone. Therefore raising the minimum wage will most certainly result in higher prices for consumers. Wilson also found that twenty minimum wage studies looking at price effects found that a ten percent in the United States minimum wage raises food prices by up to four percent. A 2007 study by the Federal Reserve Bank of Chicago found that restaurant prices increase in response to minimum wage increases. Often times, in specific areas the effect of passing on the cost to consumers can lead to catastrophic results.
Minimum wage increases in American Samoa were so pronounced that President Obama signed into law a bill postponing the increase. In 2007, the minimum wage increase was imposed on the Samoans by congress. According to the Government Accountability Office the economic situation remains bleak for...