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)
https://www.anderson.ucla.edu/faculty-and-research/anderson-review/minimum-wage-primer-leamer

The War Over the Minimum Wage (The Guardian)
https://www.theguardian.com/news/2018/apr/13/how-much-is-an-hour-worth-the-war-over-the-minimum-wage

Effects of the Minimum Wage (Congressional Budget Office)
https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWage2019.pdf

Real Wages Have Barely Budged in Decades (Pew Research Center)
https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

5 Facts About the Minimum Wage (Pew Research Center)
https://www.pewresearch.org/fact-tank/2017/01/04/5-facts-about-the-minimum-wage/

The Minimum Wage and Public Assistance (Economic Policy Institute)
https://www.epi.org/files/2015/balancing-paychecks-and-public-assistance.pdf

Americans Are Seeing Highest Minimum Wage in History (New York Times)
https://www.nytimes.com/2019/04/24/upshot/why-america-may-already-have-its-highest-minimum-wage.html

Raising the Minimum Wage Lowers Employment for Teens and Low-Skill Workers (PBS)
https://www.pbs.org/newshour/economy/column-minimum-wage-lowers-employment-teens-low-skill-workers

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