INTRODUCTION
Calls for a $15 minimum wage have been increasingly vehement in recent history. Protests and demonstrations have been forming on both coasts for the increased wage standard that has eluded so many Americans. However, this paper will argue that a minimum wage increase of this magnitude could negatively impact the very people it is meant to help. Technological advances that allow employers to replace low-skill workers (such as Macdonald’s self-service kiosk or grocery store self-check-out aisles) will seem increasingly tempting in a world where labor becomes increasingly expensive.
WHY THE MINIMUM WAGE IS HELPFUL
The Economic Policy Institute notes that a large proportion of laborers currently earning minimum wage rely on public assistance to get by . An estimated 60% of laborers receiving $7.42 an hour receive government support through some means . The 2016 report suggests that “raising the minimum wage to $12 by 2020 would reduce public assistance spending by $17 billion” , an enormous sum that could greatly benefit the American economy as a whole. Recent efforts to increase the minimum wage to $15 have made sizeable inroads recently. California and New York state legislatures have made significant moves to become the first two states to “lift the minimum wage to $15 an hour, propelling a wage target once focused on major urban areas into every corner of the economy” . The policy moves come at a time when income inequality is dominating much of the political rhetoric – not unrelated to the Presidential campaign. Policy makers have taken notice and some “see a higher minimum wage as a tool to address [the] widening gap between rich and poor Americans and stoke stubbornly slow income growth” . Pollin and Wicks-Lim suggest a number of tactics for fast-food companies to raise the minimum wage without shedding jobs, not limited to: “turnover reductions; trend increases in sales growth; and modest annual price increases over the four-year period” .
WHY THE MINIMUM WAGE COULD DO MORE HARM THAN GOOD
Bullying through minimum wages on sheer political pressure will most likely hurt the people it is trying to help as “technological advances enable firms to replace more and more people” . For those who do not currently have the technological prowess to replace low income-workers, more incentive will be given to invest “in technology to replace low-skill workers” . However, the “blunt approach” taken by California has the possibility to do more harm than good . Better approaches are available as solutions to low earners, such as “[tax] credits (income top-ups for low earners)” which benefit firms who are “encouraged to employ low-skilled workers rather than automate jobs” . Geographically-tiered minimum wages, such as in Oregon, allow for more tailored approaches to low-earners without negatively impacting poorer and rural communities . Ultimately, policy makers should explore every option available before implementing legal measures that seem purely based on political pressure.
Works Cited
Economic Policy Institute. "Raising wages would significantly reduce reliance on public assistance." 03 February 2016. economic Policy Institute. Web. 11 April 2016.
Morath, Eric. "Analysts React to California's Proposed $15 Minimum Wage: 'A Blunt Approach'." 28 March 2016. The Wall Street Journal. Web. 11 April 2016.
Morath, Eric, Erica Orden and Alejandro Lazo. Race for $15 Minimum Wage Heats Up. 31 March 2016. Web. 11 April 2016.
Pollin, Robert and Jeanette Wicks-Lim. A $15 U.S. Minimum Wage: How the Fast-Food Industry could Adjust Without Shedding Jobs. Working Paper. Amherst, Massachusetts: PERI, 2015. Document.
The Economist. Minimum Wages: A reckless wager. 25 July 2015. Web. 11 April 2016.
