Based on our research, we think raising the minimum wage will give rise to job loss, increased prices, and will limit opportunities for college and high school graduates. President Franklin D. Roosevelt signed the first federal minimum wage in 1938, it was set to $25 cents ($4.45 today). Throughout the history of minimum wage, Congress has raised it 22 times. The current federal minimum wage in the United States is $7.25. Twenty-nine states have raised their minimum wage above the federal floor, one them is California which has raised it to $12
Reason#1: According to a 2007 minimum wage research at the Federal Reserve Board and the University of California Irvine, a higher minimum wage lowers employment, especially for the least-skilled workers, which are the very meant people a higher minimum wage is trying to help. The cost of a $15 minimum wage is the loss of 1.3 million jobs in the United States. The amount of job losses just keeps increasing as minimum wage also does.
A Forbes article states that “Large corporations with big budgets will weigh the increased labor costs and elect to invest in technology to displace workers.”.This means that workers will be replaced by technology to make up for the new minimum wage. This makes sense as technology is less expensive and easier to manage. McDonald’s said that they will be replacing cashiers with automated kiosks in every one of the 14,000 stores they own. They are prioritizing this technology in places like Seattle and New York, which have higher minimum wages. This is bad news for low-wage workers.
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Reason#2: Having a higher minimum wage also means having higher prices. The CFO of Chipotle, Jack Hartung, said that Chipotle is behind raising prices. They are not alone as other chains also try to make a profit with new wage laws. The cost of fast food increased by 2.8% in 2018, about $5 billion in raised prices for popular fast-food restaurants. Hamburger prices have increased by 54% and chicken sandwiches prices have been lifted by 27%. Also in 2018, the cost of home food increased by .6%, about an extra $50. Rising prices continue as minimum wage increases.
Raising the minimum wage makes it impossible for food markets and fast-food restaurants to keep prices low. “We’re beating each other’s brains out”, Denny’s CEO says when asked about the restaurant industry’s attempts to win over other competitor’s low prices after new wage laws. Customers are expected to find themselves paying more for fast food menus in 2020. Cities that have adopted the $15 minimum wage, Los Angeles, Seattle, San Franciso, are becoming some of the most expensive cities to live in the United States. These after results will raise the cost of living and make new minimum wage increases necessary.
Reason #3: The CBO, Congressional Budget Office, states that the result of increasing the minimum wage is the reduction of available positions to college and high school graduates. In various reports from the Bureau of Labor Statistics, it is shown that almost half of all the employees in the United States earning the minimum federal wage are between the ages of 16 to 24. Employers would hire more skilled workers for the jobs that students usually take place. By increasing the minimum wage the government will actually be making life harder for young hard-working people.
There will earnings gaps between college students who can find a job and those who will have a hard time when employers stop hiring young people for more experienced workers. In addition, to these problems, many students will be missing out on the incredible life experience of working a part-time job and studying at the same time. Various researches have shown that students who had work experience in high school and college are more prepared for life after college, they are able to balance their future expenses in a way, that no work experience would have given them. This new advocation for an increase in minimum wage will also make it impossible for students who try to pay their education by working minimum wage jobs. A higher minimum wage takes away opportunities for students.
