As a consumer, do you want to pay higher prices for the same products you are buying today if the quality of the product is not improved?  Raising the minimum wage would cause increases in the prices of products without increasing the quality of the products. The federal minimum wage in the United States is set at $7.25 per hour, but it is higher in some states because states can set a higher but not a lower minimum wage compared to the federal minimum wage. The minimum wage is contained in a federal law called the Fair Labor Standards Act. Research studies show employers pass increased “minimum wage cost on to their customers” by increasing their prices (Sherk). A high percentage of minimum wage workers work for small employers, who have small profit margins (Sherk). The employers are only able to pay higher minimum wages if they increase the price of their goods and services (Sherk). The federal government should not raise the minimum wage because it would cause an increase in the prices for products (Sherk); it would also increase unemployment (Neumark), and the minimum wage is not meant to be a permanent wage for workers, but instead an introductory rate so low skilled workers can enter the workforce (Ortiz).Increasing the minimum wage will raise the cost of products all over the United States because it is a federal law that applies to the whole country.  Businesses pass the cost of the minimum wage on to their customers, and thus, customers not business owners pay the cost of higher wages (Sherk). According to James Sherk a labor economist for the Heritage Foundation, “A 10 percent increase in restaurant prices causes fast-food sales to drop 9.5 percent”(Sherk). By mandating increases in the wages for low skilled workers, the cost of products rise and businesses end up with lower revenues (Sherk). This leads to less profitability for the business which then may have to reduce the number of employees because of the decreased profits, or it could cause the business to go into debt or fail. When another restaurant has better prices more people are likely to go there especially when it comes to fast food (Sherk). Sherk argues that “A unilateral increase in McDonald’s burger prices would send diners to Burger King or Wendy’s”(Sherk). People that go to fast food restaurants are not looking to pay a lot for what they are getting. Low wage workers are more likely to eat at low priced restaurants, so increasing the minimum wage might not only affect whether they are employed, but it could affect them more than high wage workers by increasing the amount of money they spend on food (Sherk). When the market determines prices as opposed to the government, supply and demand determine price.  If the price of a McDonald’s hamburger increases but the product stays the same, customers are likely to look for a better value. They may take their lunch more or they may decide to eat at another restaurant that offers a better product for the same amount of money. If the government were to increase the minimum wage to $15, industries that rely on low wage workers would be affected the most (Sherk). According to Sherk, “These corrections reveal that $15 starting wages would significantly hurt the fast-food industry”(Sherk). The minimum wage is not meant to be a permanent wage for the workers who are hired in at the minimum wage.  The current minimum wage helps bring people into the workforce who can then acquire skills and increase their wages as they gain more skills that have a higher value to businesses (Ortiz). According to  Alfredo Ortiz president and CEO of the Job Creators Network, “the minimum wage is a training wage that gives young and low-skilled employees the skills necessary to quickly earn far more than the minimum wage”(Ortiz). Most workers who get paid minimum wage are teenagers or people who just entered the workforce.  Once in the workforce workers can acquire skills and then get promotions, raises or a better higher paying job, “Two-thirds of minimum wage employees earn a raise within their first year on the job, according to a study by economists at Miami and Florida State University”(Ortiz). Increasing the minimum wage will create a barrier for entry into the workforce for young people and others needing entry into the workforce (Neumark). If employers are forced to pay workers a higher entry wage they will look for workers that have more skills and deserve the higher wage (Neumark). Raising the minimum wage reduces opportunities for low skilled workers (Ortiz). If the minimum wage were to be raised to $15 new workers and low skilled workers will likely be stuck at the minimum wage for a long time before their skills catch up to their value in the workforce. Many people earning minimum wage would lose their jobs with an increase to the minimum wage (Neumark). According to Alfred Ortiz,”They minimum wage increases reduce job opportunities for those employees who need them most, exacerbating wage stagnation, rather than alleviating it”(Ortiz). By mandating wage increases not tied to supply and demand,  opportunities for low skilled workers to enter the job market are reduced. According to David Neumark Chancellor’s Professor of Economics at the University of California and an American economist,”higher minimum wage will lead employers to hire fewer low-skilled workers and more high-skilled workers”(Neumark). Businesses will be less likely to hire low-skilled workers if the minimum wage is increased causing even more poverty,”fewer jobs for the least-skilled are most important from a policy perspective, since they are the ones the minimum wage is intended to help”(Neumark). Increasing the minimum wage will do the exact opposite of what proponents of increasing the minimum wage want to accomplish (Sherk). It will hurt the low skilled by creating a barrier to their entry into the workforce and prevent them from gaining valuable skills that will increase their earning power (Ortiz). Instead, increasing the minimum wage, will increase unemployment and create more poverty not less (Sherk). Many people feel there are better alternatives for the working poor than increasing the minimum wage.  Many people feel the Earned Income Tax Credit is a better way to help the working poor than raising the minimum wage, “The EITC boosts incomes of low-wage employees through their tax return, supplementing incomes at a sliding scale, phasing out as incomes rise so that work is always incentivized”(Ortiz). By getting tax credits, low income workers are able to earn more money (Ortiz). The tax credit is paid by the entire tax base and individual business are not required to subsidize their workers’ pay (Ortiz). Some people claim that increasing the minimum wage will result in a decrease in the number of people living in poverty in the United States (Ortiz).  They believe that simply by increasing the minimum wage to $15 an hour everyone will have a living wage. According to Chris Lu, a Senior Fellow at the University of Virginia Miller Center and U.S. Deputy Secretary of Labor in the Obama Administration , “A full-time job shouldn’t mean a life in poverty. The federal minimum-wage amount is just $15,080 a year for full-time work” (Lu). However, increasing the minimum wage will actually increase poverty because the number of people unemployed will increase (Neumark). If you raise the minimum wage employers will hire higher skilled employees “higher minimum wage will lead employers to hire fewer low-skilled workers and more high-skilled workers”(Neumark). The minimum wage is an introductory wage that allows low skilled workers to enter the workforce, gain valuable skills and then increase their pay as their job skills increase (Ortiz). Therefore, if the goal is to decrease poverty, the government should not raise the minimum wage. The minimum wage should not be increased because the minimum wage will raise the cost of products and services all over the United States (Sherk).  Raising the minimum wage would adversely affect businesses all across the United States because it is a federal law that applies to the whole country. Also the minimum wage is not meant to be a permanent wage for the workers who are hired in at the minimum wage. It should be low enough to allow low skilled and new workers the chance to enter the workforce and gain more valuable job skills. Additionally, many people earning minimum wage would lose their jobs if the minimum wage was increased to $15.00 an hour (Ortiz; Sherk).


I'm Niki!

Would you like to get a custom essay? How about receiving a customized one?

Check it out