What are some pros and cons of raising the minimum wage?

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Proponents and opponents of raising the minimum wage nationwide are both equally convinced about the correctness and effects of their position. While everyone seems to favor an improved economy, proponents tend to see the issue in terms of the immediate benefit to workers who will be earning a “living wage.” Opponents, however, often look at the broader effects on business, such as possibly encouraging owners to hire fewer workers.

Most proposals to raise wages put the minimum at $15 per hour, a rate that has already been put into effect in numerous states. One argument for fixing the wage on the federal level is to even out the disparities between the various jurisdictions. Those in favor of a wage increase point out that purchasing power has been eroded in recent years, as most costs have increased far more than wages.

Another argument, which is both economic and moral, is that adequate income should be guaranteed to the working poor—people who work full-time but do not earn enough to cover basic necessities, such as rent and food. A corollary is that the higher wage would not ultimately cost more and would result in government savings, because those people would no longer need to obtain government assistance, such as supplemental food (SNAP). Another benefit would be to increase spending by people who would now have disposable income, which would result in an overall benefit to the economy, and then in turn could stimulate the creation of new jobs.

Many of the arguments against a higher minimum wage are based on the economy at large. While opponents often seem to endorse a living wage in principle, they argue against an increase on practical bases. Unsurprisingly, business owners tend to resist increasing wages, arguing that their profits will suffer that and, in turn, lower business earnings will harm the economy. More generally, if businesses must allocate a larger share to wages, there will be less to invest in innovation or expansion, creating a negative drag on the economy overall.

By extension, if individual businesses suffer—especially small businesses, which have little or no buffer to absorb losses—they might close, resulting in laying off workers. Along the same lines, most minimum wage increase proposals apply only to full-time workers, so a convincing counterargument is that employers would simply shift to hiring more part-time workers and lay off full-time workers, thus harming the people intended to benefit. Another counterargument is that industries would make a concerted shift to eliminating workers altogether, automating more jobs so that they could hire fewer human beings.

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