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$15 minimum wage: Friend or Foe?

Updated: Mar 9, 2021

Progressive Democratic Senators such as Bernie Sanders and Elizabeth Warren are strong proponents for the $15 minimum wage in the United States. The federal minimum wage was originally proposed in 1938 during Great Depression under President Franklin D. Roosevelt. As of 2009, the federal minimum wage is currently set at $7.25/hour, although different state governments have their own laws regarding the minimum wage. Should the minimum wage in the United States be increased to $15/hour? The answer? It's complicating.

The minimum wage law has been a hotly debated topic amongst politicians. Proponents of higher minimum wage (typically the Democratic Party) argue that current $7.25/hour minimum wage is too low for anyone to live on. Opponents of higher minimum wage (typically the Republican Party) argue that raising the minimum wage will hurt businesses, as they will not be able to afford to pay workers and will be forced to shut down, lay off employees, or reduce hire. Here are some of the pros and cons of raising the federal minimum wage. Please comment on what you think!



Raising the minimum wage increases economic activity and spur job growth

Higher minimum wage would inject more money into the economy as people will start to increase spending. This will expand the country's net GDP, which can subsequently boost job growth, reduce unemployment and poverty.

Raising the minimum wage will reduce government welfare spending

If low-income workers start to earn more money, they will rely less on government-sponsored benefits, such as Supplemental Nutrition Assistance Program (SNAP).

The current minimum wage has not kept up with inflation

Inflation is a concept where the dollar value of your money becomes less valuable over time. It's a natural economic event, which explains why prices of goods and services increase every year even though the quality of those goods and services stayed the same. Some economists argue that keeping the minimum wage constant makes people poorer, since the dollar value of their income worths less every year.

Increasing minimum wage will increase worker productivity and reduce employee turnover

According to Janet Yellen, the secretary of the U.S. Treasury, increases in wages are associated with increased productivity because employees psychologically feel more valuable. Work force becomes more attractive, and labor turnover & rates of absenteeism tend to decline


Increasing minimum wage would force businesses to lay off employees and raise unemployment levels

United States already have a high unemployment rate, and increasing the minimum substantially to $15/hour will have a huge impact on businesses. It may force employers to let go of current employees, further increasing the unemployment pool

Raising minimum wage would increase the price of consumer goods

According to the Federal Reserve Bank of Chicago, if the minimum wage is increased, industries will pass on 100% of their increased labor costs onto consumers. Your extra guacamole from Chipotle can easily increase from 50 cents to one dollar!

Teenagers and young adults can be shut out from the workforce with increased minimum wage

Many firms are already reluctant to hire young laborers who lack skills and experience. An increase in minimum wage to $15/hour will be detrimental for new individuals in the workforce. Companies are better off investing into robots that will replace service employees

Raising minimum wage would increase housing costs

In high-cost cities such as Los Angeles and San Francisco, raising the minimum wage will lead to an increase in rental prices, as workers will have more money to compete for the same inventory of rental units. More money circulating in the market gives landlord incentives to raise housing prices, since demand for housing will increase


As you can see, the minimum wage argument can go both ways. It depends on whose perspective you take: the employers/businesses or the employees/laborers?

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Image adapted from Investopedia

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