Raising Minimum Wage

Price floors are the minimum amount the government permits a product/service to be sold at. The most common price floor is minimum wage due to the fact that many people are either in favor or against this specific price floor. What many of the people that are against minimum wage do not understand is that increasing the minimum wage isn’t just about paying low-income employees more, it is bigger than that. Increasing the minimum wage would affect employees, companies, franchises, etc… Minimum wage should stay the same because not only will it affect everyone but increasing minimum wage could also bring consequences.

Many economists could argue that raising the minimum wage doesn’t affect unemployment rate, that it’s just a theory. As Hanauer (2016), writes “contrary to the cautionary headlines, there is nothing “experimental” about raising the minimum wage. The federal minimum wage has been raised 22 times since it was first established in 1938 (state and local minimum wages have been raised hundreds of times), sometimes by as much as 87.5 percent in a single year- far less that the annual increases $15 advocates

purpose.” With this being said economist or just people in general could believe that raising the minimum wage to $15 won’t bring consequences since the minimum wage has been excessively raised before. The difference now is that times are different, the minimum wage was raised before because it was necessary for the economy to continue to function properly and businesses needed workers but now technology has taken over and employees are not as necessary as they once were especially if they are working in a low skill working environment, businesses would not find it necessary to keep those workers if they are forced to pay them $15 an hour.
Generally, the people that are in favor and protest for a higher minimum wage are those that are getting payed at the minimum wage and they do this thinking that this will help them get a bigger paycheck. The factor that they are not considering is that if their workplace is forced to pay them more for a low skill job then that business is losing money therefore they have no other option but to lay off some employees, it’s all about balance. As stated by Clemons (2015) “Between July 23, 2007, and July 24, 2009, the federal minimum wage rose from $5.15 to $7.25 per hour. Over a similar time period, the employment-to-population ratio declined by 4 percentage points among those aged 25 to 54 and by 8 percentage points among those aged 15 to 24.” This is not a coincidence, the employment-to-population ratio was affected by a $2.10 difference. Imagine if the minimum wage was doubled, a greater amount of the population would end up unemployed and since it is the people that are getting payed at the minimum wage that are getting laid off it is going to be hard for them to find another job that is willing to hire them especially if it is another low skill job.
As the Congressional Budget Office (2014) explains, there are two real ways that higher minimum wage affects businesses and they are increased costs for employers to produce goods/services and substitution (pg.

7). These two factors could take a while before they directly start impaction employees but eventually they will. Employers having to increase their prices for good/services is going to drive consumers away because those consumers are not going to be willing to pay higher prices and employers are going to have to find a way to cut back on their expenses and the easiest way to do that is to have less low skill employees. Technology is an extremely important factor because it is much easier for employers to substitute a low skill employee with a piece of machinery that they would only invest in once and not worry about paying $15 every

hour.
Minimum wage is a very controversial topic with different viewpoints but my personal viewpoint is that price floors like, minimum wage should stay the stay the same because they do affect unemployment and if low skilled employees are already struggling to make ends meet then they would be in even more trouble if they were left without a job and the employers would be affected as well since they are losing help and consumers.