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In 2014, President Obama suggested raising the minimum wage to $10.10 an hour, and Americans have been arguing about the issue ever since. A vast majority of the country is in favor of the increase, irrespective of their party affiliation.

However, ethnicity seems to be a bit of a dividing line when it comes down to how much the minimum wage increase should actually be. The majority of African Americans and Latinos support a $15 an hour minimum wage, but a significant portion of Caucasians do not.

The Upsides

Those advocating a higher minimum wage argue that this measure would help alleviate some of the recent problems caused by inflation.

After all, housing costs are taking particularly large bites out of people’s salaries these days. Raising the minimum wage might help workers cover their basic expenses and provide them with more discretionary spending.

This would presumably create more jobs as the extra money gets spent.

It might also relieve some of the governmental burdens in caring for individuals who can’t cover their own expense on their salary alone, which would subsequently help lower taxes.

Employees may even stop job-hopping because they would be more financially stable and the lower attrition rates would benefit employers.

The Downsides

Yet for all the good a minimum wage raise might do, there are still some downsides. This legislation might place some employers in a budgetary bind.

Their most obvious choices to keep their companies afloat would be to lay people off, reduce employee hours or benefits, avoid hiring anyone new, outsource their work to cheaper countries, and raise prices on their services/products.

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An example of this took place in American Samoa. The government there had mandated significant raises in cannery workers’ minimum wages, which resulted in the use of the questionable coping tactics in one factory and the closure of the second. Instead of improving things, this action hurt the local economy and resulted in higher unemployment levels. The governor himself went to Congress to ask for an intervention, which they granted.

Increased service costs could contribute to higher living costs, which would invalidate the salary raises shortly after they are implemented. Hiring could also become a far more competitive process than it currently is, edging out less qualified or younger workers who need these positions to use them as stepping stones to better or higher-paying careers.

Who Would The Law Affect?

A lot of states have already caved into public pressure over the past year and bumped up their minimum wage without any government prompting. However, only about 3 percent of Americans currently make minimum wage.

One economic analyst went so far as to claim that raising minimum wages would be more beneficial for middle-class teens and college students, who have family support systems than it would be for disadvantaged adults and youngsters.

These middle-class workers normally wouldn’t apply for jobs with low wages, but unskilled adults or teens who are struggling financially presumably would. In turn, these affluent teenagers would receive the experience that they need to keep moving ahead.

Minimum Wage & Poverty

Some studies suggest that poverty is not directly caused by the minimum wage but by how many hours an individual works. After all, a full-time worker on a minimum wage salary can keep themselves above the poverty level. But they cannot singlehandedly support an entire family of four.

Another problem that has come up is that poorer individuals would lose a good percentage of their governmental assistance and would have to pay much higher taxes when their salaries increase. Therefore, it’s uncertain if increasing the minimum wage will ultimately help or hurt them.

Yet in D.C. and around the country, the debate rages on…


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