Recent Updates #12

 

A few days ago, a much-debated economic topic was addressed in the Democratic House. The fight to raise the minimum wage to $15/hour, rather than the federal minimum of $7.25/hour, is being discussed and the bill was actually passed in the Democratic-controlled House. To find more information on this discussion, I utilized an article titled, “Economics in Brief: ‘Raise the Wage’ Act Passes in the House”, on Next City. This topic is a major focus of the Democratic Party and is something they are fighting strongly for. The last time the minimum wage was changed was in 2009; however, there may be a good reason for this.

According to the previously mentioned article, “…if passed, the legislation would boost the earnings of 27.3 million workers but lead to 1.3 million lost jobs”. That is the major problem here.

It may be a nice idea that everyone be paid more and have more money in their pockets for leisure spending; however, this comes with an unexpected price. In my studies at Duquesne University, the minimum wage was analyzed in depth and in the rest of the blog post, I would like to discuss the hidden problems with a higher minimum wage, not that I am entirely against it.

If employers must pay their employees more, this causes them to either stop employing more people, lay off employees because they cannot afford the higher prices, or go out of business due to the higher cost of operating. This, like the article pointed out, causes people to lose their jobs and makes it harder to find a job because employers are on a stricter budget. This does the opposite of grow the economy because the unemployment rate will most definitely go up. Also, not to mention the people who have just entered the job market not being able to find jobs because they lack experience and employers will not be inclined to hire new, inexperienced, people.

There is also another obvious con to this bill and that is that if people are being paid more, the standard of living will most definitely go up with it. These two things have a direct relationship. The more money people make; the more expensive things become to balance everything in the economy out. This is because employers will increase prices to make up for having to pay their employees more. Therefore, ultimately, the pay increase will not do much for anyone if the prices of things go up at the same rate.

All in all, there are some definite pros to the minimum wage being increased; however, it is also important to look at the cons as well because there are quite a few.

Source:

Economics in Brief: 'Raise the Wage' Act Passes in the House. 2019. Next City, Next City, nextcity.org/daily/entry/economics-in-brief-raise-the-wage-act-passes-in-the-house.