This isn’t my first blog post about minimum wage, however with the debate continuing on in Washington I think it is important to come back to the topic and look at it from new angles.
Personally, I think minimum wage should be raised from its current level of $7.25. I don’t have an opinion on how high it should go I just believe it is to low currently. I also am very aware of the economic impact that raising the national minimum wage could have and in previous blogs have claimed that test markets could help fully understand the impact of increasing minimum wage.
In the Wall Street Journal I recently found an article on the impacts of increasing minimum wages in individual counties. Its clear that theres not one change resulting from the increase in minimum wage. Consequences vary from county to county, and differ from business to business. Some of the changes were to the product side of the business, while other changes impacted the human capital aspect. Some businesses surveyed said they had to cut back on hours they assigned employees while others said they closed marginal stores to compensate the raise. Other impacts included using less shortening in the fryer at White Castle, and cleaning the drive through lanes less often to make up for increased wages.
The US hasn’t risen the national minimum wage since July of 2009, when it was raised to its current rate of $7.25. Today law makers are arguing weather or not to raise it 40% up to $10.10. The raise will most likely reduce US employment by 500,000 jobs, however it will take an estimated 900,000 people out of poverty.
In my opinion the law makers should agree on the raise of minimum wage. Convincing anyone that a law resulting in 500,000 people losing their jobs can never be a good thing. And normally I am not one to argue a case of the ends justifying the means, however I think this is a unique situation. Since the beginning of 2014, the US has reported about 500,000 new jobs, or a number equal to that of what we expect to lose with a wage raise. A 3 month set back in the employment sector will likely set back the overall economy, however with its current state I don’t think the set back will outweigh the potential growth. My other reason for being in favor of the raise is peoples ability to adapt. Businesses already found ways to compensate for the wage raises by increasing menu prices and altering ingredients. After an overall wage increase they will adapt and move on. You may find lower quality products, or longer lines for service, however if you are willing to pay a premium you will be able to find products that are still at a higher grade.