When President Obama included the issue on increasing the minimum wage of Americans in his State of the Union address a couple of years ago, it stirred a controversy over whether it is indeed beneficial to the economy and the minimum wage earners or exactly the opposite. People from both sides have their comments, stressing the advantages and disadvantages of increasing the minimum wage. Here are some of the views expressed by supporters and critics.
List of Pros of Minimum Wage
1. Job Opportunities
If minimum wage is increased, people will have more buying power and will be spending on more products and services. Consequently, businesses will need more employees and workers to catch up with the increasing demands of consumers. This means more job openings will be available and unemployment will be lessened.
2. Less Expense for Government Aid
Supporters of the minimum wage say that people who have low incomes often turn to the government for financial support and welfare. If these people will earn more, they will be more self-sufficient and independent. Since they will be able to save from higher salaries, most of them will not have to rely on the social programs of the government.
3. Better Economy
With the minimum wage earners getting higher salaries, they will have more money to spend. This also strengthens the circulation of money and affects the economy in a positive way. Moreover, this will also take care or inflation.
List of Cons of Minimum Wage
Critics argue that increasing the minimum wage of employees will have a negative impact on businesses, particularly on companies who will be struggling to pay employees more. If a raise in minimum wage will be implemented, business owners might not be able to pay their employees and just opt to downsize and terminate some of its employees. In the end, this can lead to unemployment instead of job opportunities.
2. Higher Cost of Living
Opponents of the minimum wage claim that if employers are forced to pay higher salaries to its employees, they might take it out on consumers to counter-balance the increase in overhead expenses. This can result to higher prices on goods and services while consumers will have no choice but to spend more which can again trigger another raise in minimum wage. They posit that the increase in earnings does not really have an impact since this can only lead to more spending and a more expensive cost of living.
3. Not the Answer for Poverty
People who oppose the raise in minimum wage argue that this does not really solve the problem of poverty. They claim that most minimum wage earners are not below the poverty line so the issue of poverty is not really about them. Critics say that most of the poor families have either less family members working full-time or working at all. They suggest that instead of raising the minimum wage, more jobs opportunities should be available for the people.
Minimum wage basically affects the economy and the lives of the Average Americans. Whether it does more good than bad depends on which side of the argument an individual is.
Crystal Lombardo is a contributing editor for Vision Launch. Crystal is a seasoned writer and researcher with over 10 years of experience. She has been an editor of three popular blogs that each have had over 500,000 monthly readers.