The issue of raising the minimum wage in the U.S. to $15/hour is a highly debated topic. While those supporting the idea are claiming that it will improve the lives of workers, the opponents believe that it will have negative implications for the economy. In this regard, I consider the increase of the minimum wage to be associated with the following advantages and disadvantages.
Pros
Raising the minimum wage to $15/hour will improve the standards of living of the lower-income earners. They will be having more money to spend, thereby living a better quality of life. Moreover, raising the minimum wage to $15/hour will counter America’s inflation rate. For instance, the current federal minimum wage of $7.5/hour was set in 2009, a value that is not updated with the economic progress of the country ("Minimum Wage", 2018). This implies that workers never earn enough to cater for their current needs. Therefore, an increment in the minimum wage will counter the erosion of wages as a result of inflation (Neumark, Salas, & Wascher, 2014). Finally, an increase in minimum wage will boost the economy of the U.S. Workers will be having more money, increase their expenditure, which in turn, will promote the economic growth of the country.
Cons
As a disadvantage, an increase in minimum wage to $15/hour will raise unemployment rates in the U.S. If firms will be forced to pay workers more than the current wages, they are likely to lay off some workers. This will increase the unemployment rates and job competition. Further, an increase in minimum wage will reduce business profits. Firms will be incurring higher labor costs, which will reduce their returns. They may respond to the higher costs by increasing the prices of goods, a move that may trigger inflation. Finally, increasing in the minimum wage to $15/hour can encourage highs-school dropouts, as the higher pay may attract teenagers making them do away with school (Giuliano, 2013). They will consider schooling as a waste of time because they will be making good money through working, which will affect the job market in the future.
References
Giuliano, L. (2013). Minimum wage effects on employment, substitution, and the teenage labor supply: Evidence from personnel data. Journal of Labor Economics, 31(1), 155-194.
Minimum Wage: U.S. Department of Labor (2018). Retrieved from https://www.dol.gov/general/topic/wages/minimumwage
Neumark, D., Salas, J. I., & Wascher, W. (2014). More on recent evidence on the effects of minimum wages in the United States. Journal of Labor policy, 3(1), 24.
