Written by: Theodore Rogers
A minimum wage increase is a tempting idea in theory, promising more money to many workers and forcing large corporations to pay workers their fair share. Although an increase to the minimum wage may seem beneficial to those with a lower income level, this is not the case. The minimum wage should not be raised because it increases unemployment, makes it harder for small businesses to succeed and makes it more difficult to escape poverty.
Yes, a higher minimum wage would be helpful to the lucky workers who are able to maintain their jobs. But as pay increases, costs must be cut by the company, and the majority of cuts are made in labor costs. Therefore, as the minimum wage increases, unemployment increases.
When companies are forced to make job cuts, they inevitably have to determine who will get laid off. Their choice will always be to retain the most educated and qualified workers. The poorer someone is, the harder it is to afford quality education or get a job at all. When a company has less positions, the applicants with less education and experience fall by the wayside. When minimum wage increases, the poor disproportionately lose out on jobs.
When lower income jobs are eliminated, there is no stepping stool for the poor to rise out of poverty. This enforces a system where those with wealthy parents are able to find good paying jobs, but those with poor parents have an incredibly difficult time escaping poverty. The poor stay poor and their children stay poor, while the rich stay rich and their children stay rich. A higher minimum wage will make the path out of poverty much more difficult.
Small businesses will be destroyed by a higher minimum wage. Companies like Google and Amazon can afford to pay their workers high wages. Smaller businesses, however, have a very difficult time maintaining those costs.
Many businesses never get off the ground because they simply cannot afford the minimum wage required for workers. A higher minimum wage will make the already daunting task of competing with large corporations that much more difficult. No longer can the poor immigrant open his own shop and work up from nothing — labor costs are far too high now.
Increasing the minimum wage is not an economically sound policy. It massively increases unemployment, destroys small business and disproportionately harms the poor. It is clear that minimum wage is harmful once one fully understands its effects. It accomplishes the opposite of what it sets out to do by making it more difficult to rise out of poverty, cementing the rich as rich and the poor as poor.