Negative Effects of Raising Minimum Wage

Minimum wage is a popular topic that has caused an uproar of debate for these past years. My research has guided me to take a stand in the debate for weather the minimum wage should be raised. I have conducted research on both sides of the argument. One side in particular debates that the current federal minimum wage should be raised. Some think it should be $15.00 an hour, others think it should only rise slightly. Many have proof that raising the minimum wage will hurt jobs and the economy, while others have expressed that there is no effect throughout the economy when wages rise. My method of research contains a process of researching information through Academic journals. I pay close attention to what each author is expressing, as well as the stand that they take in the overall debate. I plan to continue to conduct research to find the best scholarly work to take a final stand in the debate while also educating my audience on a topic that has a great effect in our economy.

As there are many people struggling to live their daily lives, the topic like minimum wage can be very important for deciphering the many ideologies. Does raising the minimum wage hurt jobs and businesses? Raising minimum wage harms teenage employment, pushes nonpoor families in to poverty, and hurts small businesses on a piercing level. As many push the movement to increase the federal minimum wage, I will present my findings for why I disagree, and what has engaged me to not crave this change.

In many occurrences’ states have announced big plans to increase their minimum wage. New York, Los Angles, and many other popular cities have taken a stand to increase their minimum wage to $15/hr. While this may help many families escape poverty, this concept will also push costs of good up as well. Each state has the control to determine their state minimum wage. Many states have a minimum wage that is set slightly above the federal minimum wage price but defers from state to state. While many want the federal minimum wage to be $15/hr, unfortunately this would look different in each specific state. What this means is that the cost of living is different in every city. $15 in New York really gets you $12.26, whereas in Allentown, Pennsylvania, $15 will buy you $15 worth of goods (Bliss, 2015). This is called relative purchasing power. “To calculate the relative purchasing power, you have to measure the difference in local price levels of goods and services across the country, relative to the overall national price level” (Bliss, 2016, para.5). With this measurement it can help dig deeper in the issue surrounding minimum wage. Like Laura Bliss (2015) said, “if the goal were to guarantee low-paid workers everywhere in the country the same real purchasing power, that would require hundreds of different minimum wages, scaled to each locality's cost of living” (para.8). Many economists advise that if cities are debating on rising their minimum wage, to wait and see how big cities like New York and L.A. result after a wage rise. Cities can do much more to develop the lives of low-income earners, such as increasing housing stock or advocating for tax policies (Bliss, 2015). As of right now federal minimum wage is at $7.25 and is due for increase but I don’t support that the magic number 15 is best to increase wages to.

While the argument over what the minimum wage should be set to, many people will express their feelings on the negative effects of raising the minimum wage. For instance, in California, nonprofit organizations can’t keep up with the rise of wages to compete with their operating cost. In the article “Wage Dilemma: disabled programs hurt by higher minimum pay”, the author Helen Floersh (2017) explains, a business called New Horizons, a nonprofit that provides case management services for persons with disabilities, will have to foot $202,000 of the $243,000 needed to bump entry level employees to the new minimum wage. Organizations like New Horizons have been surviving with uneven funds for years. While L.A. is moving toward a $15 minimum wage, this will position many nonprofits liability to succeed. Just like with small businesses, they have to compete with the ever changing of wages, but when wages go up so does operating cost, and price of goods. With a nonprofit like New Horizons, who strictly helps those in need but still needs to pay workers, it is detrimental to keep a business like this running when its unstainable. Floersh (2017) says “Pressure from rising fixed costs coupled with a higher minimum wage has forced as many as 30 percent of housing nonprofits to close their doors, she estimates. Finding a moderately-priced home in Southern California is already a challenge; tracking down one that can accommodate a group or even an individual with disabilities is much more difficult” (para.22).

Nonprofits like New Horizons are given an extra year to comply with a new change in wages. The Lanterman Act allows regional centers to appeal to the state for provider rate increases under certain circumstances (Floersh 2017). Some services can apply for anticipated rate adjustments for the following year in case of staffing or location changes. This can be a very difficult situation to deal with especially being in the position as a nonprofit. Small businesses can also run into to implications like the situation that New Horizons is facing. As it might sound like a great idea for wages to rise for people to combat the high cost of living in L.A. and many other cities, it can also be very complicated to decide the best alternatives.

Minimum wage is a very complicated subject. As easy as it may be to understand at first, there are many implications that are imbedded into the subject. As I just explained only one situation in my writing there are many more instances with other business and individuals explaining their side of the story and the results that factored when recent minimum wage hikes have come into play. Minimum wage can help people positively and some negatively. Raising minimum wage harms teenage employment, pushes nonpoor families in to poverty, and hurts small businesses on a piercing level. Low-income earners, small businesses, and non-profit organizations need to pay close attention to the effects that have happened in the past to prepare for the forthcoming wage plans.

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