We have many problems in our society today. From a wavering job market to a growing socioeconomic gap, many Americans are looking to our next president to fix these problems. One underlying cause of these problems is minimum wage. Though wage hikes could be viewed with optimism, these feelings are incorrect. Over time, minimum wage hikes would be detrimental to our society for a variety of reasons.
Higher minimum wage rates affect the job market. In American society, there are three levels of socioeconomic status; the lower, middle, and upper classes. Most, if not all, small business owners reside in the middle class. With minimum wage hikes, it becomes harder for these small business owners to pay their employees, causing them to make cutbacks or even go out of business. For example, the Congressional Budget Office issued a report of possible outcomes resulting from wage hikes. Their findings concluded that if the minimum wage was raised to as little as $10.10 per hour, it would cause a reduction of 500,000 jobs. Many states have plans underway to raise the minimum wage to $15 per hour, which would cause many more people to lose their jobs. Therefore, job loss is major issue resulting from raising minimum wage rates.
The rise of minimum wage also detrimentally affects socioeconomic inequality. Of the three socioeconomic levels, there is a vast divide between the upper and lower classes. For example, the combined wealth of the richest four-hundred Americans is the same as the entire combined wealth of the lower class; over 150 million people. This inequality can be traced back to minimum wage. Taking this divide into account, what would happen if the minimum wage was raised? The answer is that with rising minimum wage rates, there would be a resulting decline in employment because of the higher expense to employers. This would cause the lower and middle classes, which comprise most of the minimum wage job holders in our economy, to become poorer, furthering the socioeconomic divide. Even though the current minimum wage is not a sufficient income for many lower class families, raising the minimum wage would destroy many of the jobs these families are relying on. Which is worse, a low wage or no income at all? Minimum wage hikes hurt the economic equality in our society and can also negatively impact the economic standing of the lower class.
Many experts agree that a healthy middle class is the core of the economy. However, as a result of rising minimum wage, the middle class is shrinking. For example, a CNN article shows that since 1971, the number of adults in the middle class has dropped 11% while the upper and middle classes have been rising. This is caused by minimum wage because higher minimum wage rates cause small businesses to fail, sending those business owners and employees down the socioeconomic scale while the larger business owners become more wealthy because of a lack of competition, thus shrinking the middle class. Even though large corporations employ many of the minimum wage workers in our society, the increased income for these companies would outweigh their increased expenses resulting from wage hikes, therefore benefiting these corporations. This is yet another of the detrimental impacts of minimum wage hikes.
Some may say that raising the minimum wage could be beneficial by putting more money in low-wage workers’ pockets and that this would stimulate the economy. Currently, many states have plans to raise the minimum wage to $15 per hour. However, if the minimum wage was raised to $15, is that worth a loss of 7 million jobs across the country, as predicted by recent research? Overall, taking into account the pros and cons of a higher minimum wage, it is not beneficial to our society to raise it.