I'm Against a $15 Minimum Wage Hike
By: Vianca Rodriguez
The effects of a federally mandated minimum wage hike transcend into long term consequences that would affect every single aspect of society and its people. President Biden has been a loud advocate for a $15 minimum wage increase, seeking Congress to push this requirement into the $1.9 trillion COVID-19 relief bill that had recently been passed, yet failing to do so.
Moral arguments can only go so far as data-driven arguments. A $15 minimum wage may benefit the resident of the city of New York, whereas a $15 minimum wage may not necessarily benefit employers and small businesses of a small town in a U.S. territory like A?asco, Puerto Rico — where I am personally from. The number of residents within the city, overall state population, cost of living, interest rates, taxes, and even the own value of the dollar wildly vary from state to state.
Puerto Rico is one of those places where attempts at raising the minimum wage have shown exactly what happens when you combine hefty wage hikes with an unstable local government that is unable to keep both their deficit and overall budget under control. The disincentives brought forth by a former Clinton administration as well as local Puerto Rican legislation that produced higher-priced labor and eliminated tax exemptions led employers, potential employees, and small businesses to either file for bankruptcy or pack their bags and leave the island.
A study published in 1992 indicated imposing the U.S.-level minimum “reduced total island employment by 8-10% compared to the level that would have prevailed had the minimum been the same proportion of average wages as in the U.S. In addition, it reallocated labor across industries, greatly reducing jobs in low-wage sectors that had to raise anima substantially to reach federal levels.” What’s the point of raising minimum wage when there will be virtually no possibilities for people to pursue these wages in the first place?
The impact of COVID-19 over the last year has placed a host of small businesses on the chopping bloc, which has led to the loss of over 40 million jobs at the peak of the pandemic. Raising the minimum wage on small businesses that are already facing financial constraints will terminate their prospects at survival. A study published by the Congressional Budget Office as recent as this year showed that the Raise the Wage Act of 2021 proposed by Democrat-elected officials would result in the immediate loss of over 1.4 million jobs per year, nationwide. Although the study also mentions poverty would be reduced by 0.9 million by 2025, one is still ignoring a large potential chunk of the population that would be left without a job. This is also wildly assuming every one would qualify for unemployment claims to keep them steady while they land another job —or that the federal government would even have sufficient compensation and a reliable budget to spend. The federal deficit would largely increase between 2021 and 2031, by at least $54 billion. Prices on goods and services would become more expensive, and employers would be receiving far less profit to sufficiently pay back to their employees while also keeping their businesses operable.
Everyone deserves a chance at making a living wage, but it has to be attributed to a sensible job. If we could find ways to incentivize young adults that are in the process of obtaining their degree/already with a degree, we could have more educated individuals seeking higher employment in the labor market that equate their skills and/or trade certifications, which would then naturally justify higher wages. Rather than focusing on solely raising the minimum wage, we should focus on creating more opportunities and increasing access for young adults to expand their skills. At the end of the day, entry level jobs were always meant to be just that — entry level. They were never meant to provide for a family or to upkeep a personal lifestyle. Tapping into their potentials will not only achieve their means of basic survival, but to obtain the right tools essential for superseding any obstacles the current climate seems to offer them — without further governmental interference.