Opposing the Increase of Minimum Wage

The increase in the minimum wage that was passed in 2009 in the United States aimed to improve the livelihoods of those employed. Due to several factors, including but not limited to an increase in taxation and high standards of living, the increase in the minimum wage targeted to cushion employees from financial pressures. However, although that was the main aim of increasing the minimum wage, it is apparent that further increase will have a myriad of repercussions. The most affected group when the wage increases is that of inexperienced workers. According to Xie & Chen (2017) assertions, the group that the American Congress aimed at protecting is likely to suffer the most because employers will start seeking better and cheaper alternatives. Currently, the minimum wage in the United States stands at $7.25 per hour (Gwartney et al., 2013). For inexperienced and low-skilled workers, the fee is arguably expensive for employers to sustain their business. Hence, substituting them with machines is a cheaper option.

Moreover, the aim of combating poverty by increasing the minimum wage is inapplicable. According to Wilson (2012), the increase leads to massive job losses due to the inability of employers to sustain the budget. It is worth noting that even as the American Congress pushes for the increase, employers are hardly considered as far as injecting revenue in their businesses is concerned. Hence, due to the burden that is brought by high salary rates, employers find it challenging to cope up with the situation, thus laying off some of the employeesadditionally, an increase in the minimum wage results in the unwanted competition of labor (Gwartney et al., 2013). Thus, the less-privileged young people that the increment is meant to protect job opportunities to overqualified workers.

References

Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. (2018).Macroeconomics: Private and public choice(16th ed.). Retrieved from https://www.cengage.com

Wilson, M. (2012). Policy Analysis:The Negative Effects of Minimum Wage Laws.Retrieved from https://www.cato.org/sites/cato.org/files/pubs/pdf/PA701.pdf

Xie, F., & Chen, R. (2017). The Income Effect of Minimum Wage for the Underclass: Is It Positive in China?.World Review of Political Economy,8(4), 503-541. Retrieved from https://www.jstor.org/stable/pdf/10.13169/worlrevipoliecon.8.4.0503.pdf?refreqid=excelsior%3Ae097fc04e7c5c24ff8a1bc6913548efb

Questions

"While some proponents of raising the minimum wage estimate that a much larger number of individuals and families will move out of poverty if they earned more money, a related potential benefit is a projected reduction in the need for federal and state government expenditures on financial aid for poor and low-income individuals".

1. Do you think they have a valid point?
2. Would an increase in the minimum wage have any positive effects on the economy?