What Will Happen If We Raise the Minimum Wage?

Minimum wage in the U.S. has been $7.25 an hour for the last 10 years. Raising it could lift low-income workers out of poverty, but it might also kill jobs and potentially hurt the economy. Should it be raised or should it stay the same?

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**Why is the current minimum wage $7.25?**
When the great depression hit in the 1930s, President Franklin D. Roosevelt wanted to do something about inequality. In 1938, he signed into the law the first-ever national minimum wage at 25 cents an hour, which would equal about $4.45 today. Since that time, Congress has increased the minimum wage 22 times. The current level of $7.25 was last set in 2009, when President Obama signed it into law.

**What are the benefits of raising the minimum wage?**
For many supporters, raising the minimum wage is a basic issue of fairness in a society where income inequality keeps rising. They think putting more money in the pockets of low-wage workers is an effective way to reduce poverty. So, what happens if you RAISE their wages to 15 an hour? A report from the Congressional Budget Office calculated that it would boost the pay of 27 MILLION workers, and would lift 1.3 million people above the poverty line.

A lot of these low-wage workers make so little money that they qualify for some form of government assistance like food stamps or housing support. One study by the Economic Policy Institute found that for every dollar the minimum wage is increased, spending on government assistance DROPS by 5.2 BILLION dollars! So, if companies had to pay their workers MORE, it would actually SAVE the government money.

**What are the negatives of raising the minimum wage?**
A lot of people think it will kill jobs. Increasing the minimum wage means businesses have to spend more money to pay their employees. And not every business is like Amazon or Apple with endless amounts of money. Many are small mom-and-pop stores. So, they might cut back on employee hours, or lay people off. Economists have been arguing for DECADES about whether or not raising the minimum wage kills jobs. Many agree that a SMALL increase won't. But, going from $7.25 to 15 is NOT small. It's more than double! A report from the Congressional Budget Office predicts that a 15 dollar minimum wage could force employers to lay off 1.3 million workers.

If we did increase the minimum wage, some economists worry about what that would do to the economy. With higher wages, many businesses would have to raise their prices to pay for it. Over time, that can increase the cost of living, and low-wage workers might be back at square one where everything's too expensive compared to how much money they're making.

SOURCES:
A Primer on the Minimum Wage (UCLA)

The War Over the Minimum Wage (The Guardian)

Effects of the Minimum Wage (Congressional Budget Office)

Real Wages Have Barely Budged in Decades (Pew Research Center)

5 Facts About the Minimum Wage (Pew Research Center)

The Minimum Wage and Public Assistance (Economic Policy Institute)

Americans Are Seeing Highest Minimum Wage in History (New York Times)

Raising the Minimum Wage Lowers Employment for Teens and Low-Skill Workers (PBS)

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[AboveTheNoise]

Hey everyone! So it might seem obvious to anyone working a minimum wage job that an increase would be a good thing -- but what about the big picture for the economy and jobs? Watch the video and hear from both sides of this controversial topic. And, as always, let us know what you think.

[GoranIsmov]

Having been concerned about finances throughout my entire adulthood, it's captivating to observe this video and realize that I can confidently identify with level 6. Experiencing the freedom of not being preoccupied with the financial concerns that consumed me for numerous years is truly liberating. I suppose this is the result of putting in diligent effort for the future.

[MyWasteOfTime]

So here's the question if you raise MW up to $15, how much do you pay those that were already making $15? It's not just raising those who make less than $15...

[mrr]

I appreciate this video for giving a neutral, let the viewer decide, sort of approach :)

[mycreatorsuite]

Employers are already hiring part time and cutting hours to save money. If the minimum wage went up to 15 there is no doubt in my mind that employers would cut even more hours and fire people. Inexperienced workers would definitely feel the consequences of this.

[DPPZ]

The Scandinavian countries actually have this better figured out than the US does. When you have a blanket federal minimum wage, the prices have to go up to compensate, which is fine because it really doesn't change very much in terms of purchasing power. Everyone compensates by raising prices or lowering hours until demand starts to pick up due to the lower class having more money, which forces companies to raise worker hours again and raise prices to compensate. In the end, purchasing power returns back to the equilibrium it was before the wage bumps.
In comparison, the Scandinavian countries have no minimum wage and instead choose to strengthen labour/union rights so that each industry can negotiate their own minimum wage, which has the effect of allowing people to receive the benefits of their company's growing wealth without having to deal with the increases in price that occur across the board like they do with a federal minimum wage hike. In this way, workers actually have an incentive to make their company successful because their union rep will be able to negotiate them better wages with growth, while also giving them a reason to care about the company's ability to compete on the open market.
Instead, what you have in the US is a union that isn't accountable to the business and a fight for a minimum wage that doesn't really help them very much in the end. We are manufacturing class conflict with our shitty policies.

[blacklyfe]

If businesses can't pay minimum wage workers more money they shouldn't be in business

[OdysseusAres]

This was fair and reasonable and researched. Mad props.

[mauriceorayii]

In the 90's small businesses had the flexibility to pay their top employees more. Now, everyone makes close to the same money.

[Mamma_Kinzie]

Thank you for giving actual facts and leaving it up for people to make up their own minds. Its refreshing. I hate watching videos where they tell you what to think and give half the information. Keep up the amazing job you are doing. Keep getting facts out there so people can make an informed decision. You rock. 😁

[christopherhorruitiner]

I watched the top 6 or 7 videos on YouTube on the topic and this is by far the BEST. Straight down the middle. You guys earned yourself a sub ;)

[AndromedaCeline]

If your employees work full-time and you can’t afford to pay them a livable wage, you shouldn’t have a business, period. No one working a full-time job should be below the poverty level.

[jpt]

I'm all for reducing taxes. It keeps more money in the workers pockets and reduces prices

[GhengisRon]

First off, great video. It was very thought provoking, even with my sleep deprived brain.

Second, I don't think raising the minimum wage is a good idea. The loss of jobs would be too great, more people would go on government assistance. Minimum wage is meant to be a start. People should be motivated to get out of those jobs. That's why I keep pushing myself to learn more and to work harder.

[chaserohwedder]

Not only will people lose their jobs but it will make it more difficult to run and even start a business. Good luck to you.

[Silverheart]

Ideas
1. Don't depend on entry level jobs as a career.
(The reason is obvious, aim low and you will probably go low)
2. Develop aspiring goals and work hard towards that goal. 
(I used to work 70 hrs per week and taking graduate classes)
3. Education ! Finish High School.  
(if you don't then you have made choices that will greatly affect this issue)
4. Get training that will prepare you for better jobs.
(Training not only prepares and develops skills, but also exhibits initiative)
5. Build connections and networks
6. Don't waste time
7. Get and Use help
8. Be a volunteer
9. Be ethical and moral

If you fail to do these things, you are making decisions that will very greatly increase your likelihood of having to depend on a entry level job, that pays minimum wages, most of your career.

[JeffMadeMe]

My favorite quote "If they lowered the minimum wage, I would have to penny pinch and I would have to learn to budget." I am not sure we want people learning ... Sounds risky.

[radix]

1. States should absolutely adjust their own minimum wage to meet the needs of their citizens, but a Federal law will never meet the needs of workers in both San Francisco and rural Wyoming.


2. Minimum wage hikes are always associated with a spike in inflation, which disproportionately affects the very workers it also helps. It has diminishing returns.


3. The biggest proponents of raising the minimum wage sometimes aren't earning anything close to it. Big unions often have wage structures that are a multiple of minimum wage, so a $3 raise for MW workers could mean a $9 raise for an already-middle-class worker. This isn't necessarily good or bad, just be aware of who is making the argument, and what their own motivations might be.

[Nameless-qehu]

An increase in the minimum wage has proven to cost more jobs for minimum wage workers than it does to improve them. In Seattle, workers were fired in massive numbers, and, as we all know, having a job is better than being unemployed.

[dhrich]

Hate to say it, but I'm excited to see what people's reactions are when raising the minimum wage doesn't work and it just causes more problems 🤣