Raise the Minimum Wage: What Are the Benefits and Disadvantages?

The United States House of Representatives passed an altered version of the Raise the Wage Act of 2019, which will progressively raise the federal minimum wage to $15 per hour by 2025, on July 18, 2019. The federal minimum wage is now $7.25 per hour and has not been raised since 2009.

However, the bill failed in the Senate as the Senate Committee on Health, Education, Labor, and Pensions refused to vote on it (or to discuss any increase in the minimum wage, for that matter). As a result, the debate over increasing the minimum wage rages on.

It was an agenda that Joe Biden wins the presidential election in November 2020, a federal minimum wage of $15 per hour may become a reality, since it is one of his policy priorities. The debate over raising the federal minimum wage has both proponents and detractors.

Important points:

• Despite attempts to raise the minimum wage, no measure has cleared both chambers of Congress.
• Proponents of raising the minimum wage claim that adjustments are required to help salaries keep up with rising living costs, and that a higher minimum wage will raise millions out of poverty.
• Opponents of raising the minimum wage think that higher wages will have a detrimental impact on the economy, such as increasing inflation, making businesses less competitive, and causing job losses.

Benefits

• The fundamental argument in support of raising the minimum wage is that greater wages would enhance the general standard of living for minimum wage workers by providing them with a more adequate income level to deal with rising costs of living.
• According to a 2019 Congressional Budget Office (CBO) assessment, a minimum hourly wage of $15 by 2025 would result in a considerable increase in the standard of living for at least 17 million individuals, with an estimated 1.3 million people rising over the poverty line.
• While some supporters of raising the minimum wage believe that a much larger number of people and families would be lifted out of poverty if they earned more money, a related potential benefit is a projected reduction in the need for federal and state government expenses.
• ?Moreover, increased employee morale as a result of better pay is an intangible benefit that may translate into real advantages for both businesses and employees.
• ?Business owners regularly mention the difficulty of giving enough motivation to motivate employees to put out their best effort in their jobs, which is especially challenging for low-wage workers who believe their efforts aren't keeping them out of poverty.
• Boosting staff morale may readily translate into more tangible advantages like higher employee retention and lower hiring and training expenses. Employees who are more likely to stay with a company for a longer length of time may benefit from more advancement and a reduction in overall job-related relocation costs.
• Another potential advantage of raising the minimum wage is an increase in economic growth, as consumer spending often grows in pace with incomes. A higher minimum wage would put more money in the hands of millions of employees, who would then spend it at stores and other businesses.

Drawbacks

• One of the drawbacks of raising the minimum wage is that firms are likely to raise their pricing, stoking inflation.
• Opponents claim that raising the minimum wage would likely result in higher wages and salaries across the board, significantly increasing operating expenditures for businesses, which would subsequently raise the pricing of goods and services to pay their increased labor costs.
• Increased prices imply an increase in the overall cost of living, which might effectively nullify any benefit obtained by employees having more money in their pockets.
• Although the federal minimum wage in the United States is now $7.25 per hour, 29 states and the District of Columbia have passed higher minimum wages.?
• ?Another issue that might arise as a result of a higher minimum wage is job loss. Many economists and business leaders claim that because labor is a key expense of conducting business, corporations will be obliged to slash employment in order to remain profitable.
• According to the 2019 CBO analysis, increasing the minimum wage to $15 per hour by 2025 would result in the loss of nearly 1.3 million jobs. The figures may be far higher if corporations made a significant shift toward exporting more employment to less expensive labor markets outside the nation.
• One possible negative consequence that is less obvious is the prospect that a higher minimum wage could boost labor market rivalry for minimum wage employment.
• A higher minimum wage might result in a significant number of overqualified people filling minimum wage employment that would otherwise go to youthful or otherwise inexperienced workers. This might make it difficult for younger, less experienced job seekers to get jobs and gather experience to further their careers.

In conclusion

Many politicians want to raise the federal minimum wage to $15 per hour. Increasing the minimum wage is supposed to raise people out of poverty and promote work ethic; yet, it also has numerous potential negative consequences, such as inflation and job loss.

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