Keoni Buenavista
Date: 05/04/2022
Prompt: Should the federal minimum wage remain at its current state or should it increase?
Generally, the United States has shown to have a strong economy in comparison to other countries and this has allowed the country’s currency to remain quite strong. As years have gone by though, the U.S. has been subject to what other countries have faced within their economies which is inflation. As a major concept in economics, inflation is the general increase in the cost of services and goods within an economy. Essentially, this means that with inflation, things are much more difficult to buy with a limited amount of money. Those who rank in the low-income category or make the federal minimum wage tend to suffer during times of high inflation. Increasing the federal minimum wage could have several benefits such as allowing those in lower-income categories to have a better salary, but in my belief, I think that increasing the federal minimum wage could be harmful.
The first reason why I think that the increase in the U.S. federal minimum wage could be harmful to the country is that it will decrease employment. It does this by pushing a higher cost on employers who need to keep costs as low as possible in order to keep their businesses running. Having a higher minimum wage takes away from the money that employers have allocated for spending on the cost of having employees, meaning fewer employees.
Another reason for not having an increase in the minimum wage is that the prices of goods and services will be higher. In almost direct relation to my first reason, employers need to make money which allows them to invest in expanding their businesses and survive within their local economy. If the cost to have employees is higher, they need to compensate, and this tends to be in costs for the consumer of the goods and services that the business produces. This change is especially evident in certain cities in California like San Diego or Los Angeles which have had their minimum wage increases (locally) which has led to a higher cost for food, delivery services, and more on the consumer.
As an extension of both effects, I have described about how costs for businesses and unemployment will rise, and younger generations will have decreased opportunities in the workforce. Inexperienced workers in the future will have less value as employers want workers who will cost them less in terms of training and work efficiency. Young workers tend to have little to no experience in the field that they start working in and this is also a sign of inefficiency. Also as a result of the minimum wage increases, businesses may look towards better technology instead to replace workers in sectors of their business that they believe can be done more efficiently and cost-effective by machines and technology.
In Conclusion, while having an increased minimum wage may seem beneficial in the short term, over time there can be drastic effects that may change society forever. To combat the issue of buying goods and services, first businesses need to have lower costs which may be indirectly caused by local, state, and federal government(s).