Dear Future President,
I am writing this letter to you today in order to bring attention to the issue of whether or not the federal minimum wage should be incrementally increased in the coming years or should remain stagnant and unchanging. While some Americans claim that raising the minimum wage above its current state will advance economic activity and job growth, the reality is that raising the minimum wage will do quite the opposite. Increasing the minimum wage will force an increase in the American unemployment rate, escalate the price of United States consumer products, and heighten the foreclosure of small businesses. As the future president, you are capable of ensuring that the federal minimum wage remains at its current level, and is not increased or altered.
Increasing the federal minimum wage will push many young Americans out of the united states work force. According to the website American Prosperity, “less than 50% of those receiving the minimum wage are full time workers.” This statistic insinuates the fact that a large majority of those receiving minimum wage are simply employed in a part time job, and are not taking part in a job they can consider a career. This reality allows public employers to fire large numbers of employees who can be easily and quickly replaced. A higher minimum wage, forcing employers to direct more company profits towards their employees, will cause the need to have a smaller workforce in order to keep the amount of money employers bring in themselves at the same level. A higher minimum wage does not instantly create more business for every company. Along with serving as part time jobs, positions paying minimum wage only employ a very small percentage of the American population. According to pbs.org, those receiving minimum wage constitute “just 4.3 percent of hourly paid employers.” This low percentage of the total American workforce causes employers to make part time positions more competitive the higher the wages become. As wages increase, employers will seek workers that are more qualified and better suited for positions, as they will need to ensure that the increase in payment is not wasted on average or under performing employees. More intense job qualifications and competition over attaining certain positions will lead to a decrease in overall employment.
The creation of a smaller workforce and more intense job competition leads to the next issue created by an increase in the federal minimum wage, the cost of consumer products. Along with cutting back on the amount of employees needed to run a business, employers will increase the price of their manufactured goods in order to maintain their previous levels of income. According to Kenneth Lofton in an article posted in the L.A. Times, the minimum wage increase in East Bay City resulted in “restaurants see[ing] price increases of about 7% to 8%.” This price increase was a direct result of the increase in minimum wage. Businesses can’t continue to flourish or profit when their income remains the same while their expenses continue to increase. Lower employment allows for a slight decrease in expenses, however the remainder of the expenses can only be covered by an increase in product price. This increase in price contributes to overall economic inflation, a historically deleterious occurrence.
Higher unemployment rates, higher product prices, and an increase in inflation all contribute to the third result of an expansion of the minimum wage, the collapse of small businesses. Young companies and organizations, struggling to make a successful foothold in the world, are brought down by a decrease in gross profit. The funds necessary to expand and succeed are diverted to paying higher wages. Along with diverting more funds towards workers, increased product prices do not always pan out. Higher prices may drive away consumers, accomplishing the opposite of increasing profit. Companies willing to keep their prices the same in order to preserve business leave young corporations behind, allowing them to fall into a loss of profit and eventually collapse. According to smallbusinesses.com “companies unable to reduce expenses may face liquidation or bankruptcy as a result of the wage increase.” The more companies and businesses that fall prey to higher pay, the further down America’s economy will fall. Less businesses able to employ means less positions able to be filled by American citizens. The collapse of small businesses will directly result in a decrease in the employment rate of the United States.
One particular argument proposed by those in favor of increasing the minimum wage is that its expansion will decrease crime rates as a higher pay will encourage members of the public to participate less in crime and more in working. However, due to higher minimum wages decreasing the employment rate, more men and women will resort to crime in order to gain a source of income. As less people will have the ability to work, a larger number of criminals will appear.
In order to prevent a lower unemployment rate, an increase in the price of consumer products, and the foreclosure and collapse of small businesses, the minimum wage must remain as it is, and must not be raised to a higher amount.
Coopersmith, Wesley. “Minimum Wage: More Harm than Good.” Website. Version 1, Number 1, Americans for Prosperity, December 19, 2013.
Vitez, Osmond. “Problems with Minimum Wage Increases.” Website. Version 1, Number 1, The Chron, November 22, 2015.
Lien,Tracey. Anderson, Rick. Masunaga, Samantha. “What it's like to live in a city with a $14 minimum wage.” Website. Version 1, Number 1, Los Angeles Times, April 2, 2016.
Pathe, Simone. “Undisputed facts about the minimum wage.” Website. Version 1, Number 1, PBS, January 1, 2015.