The Negative Effects of Raising the Minimum Wage Essay

If we took away the minimum wage, we could wipe out unemployment completely because we would be able to offer jobs at every possible skill level. -- Michele Bachmann Proponents of raising the minimum wage claim that if the minimum wage was raised, then many economic and social problems would be alleviated. This contention is at odds both with economic principles and years of creditable research. The effect of raising or even having a minimum wage has been studied extensively and the majority of studies have proven that raising a minimum wage does not have the desired effect. Both micro and macroeconomic forces affect the results of raising the minimum wage. The secondary effects of raising the minimum wage are bad both for†¦show more content†¦This results in some workers losing their jobs. The majority of these workers will be those who are the least productive. When the cost of labor is increased artificially by legislation instead of through market forces, companies will attempt to reduce their cost. When you pay someone more to work, the assumption is that they will have more disposable income and increased consumption will contribute to the economy as a whole. By increasing the cost of labor without an increase in productivity, market forces will cause a business to look for alternatives either through reduction in work force or by relocating jobs (offshoring). While those who are still employed will see an increase in pay, those lost their job will have no income and the government will lose the taxes associated with those jobs. Businesses will not just reduce the number of employees they will also seek to maximize their profit by reducing benefits. While most minimum wage jobs do not offer much in the way of benefits, many at least offer some form of incentive. In some cases it may be a free of reduced cost meal, others may offer at least some form of basic health plan or 401(k). The effect of raising the minimum wage is also disproportionate, affecting small businesses more than larger companies. This leads to a greater incentive for a small business to participate in the black market for labor, by paying employees in cash in order to pay them less thanShow MoreRelatedThe Positive and Negative Effects of Raising Minimum Wage805 Words   |  4 Pagessensitive topic for many Americans is their income. Many people’s income relies on minimum wage. In 2012, 3.6 million people received an hourly pay at or below minimum wage. There is an ongoing debate in government as to what the minimum wage should be. Stuck at $7.25, Obama has suggested raising the minimum wage to $9.00. Depending on a person’s perspective, raising minimum wage could be positive or negative. Minimum wage has the ability to change lives, and change the economy. 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WagesRead MoreEffect Of Raising Minimum Wage1215 Words   |  5 PagesEffects of Raising Minimum Wage The minimum wage in this country has been a controversial issue. Many people believe it will help reduce poverty and boost the economy. However, they are not looking at the downfalls this will bring to our country. This could make the unemployment population rise, it will raise prices of other things, and would have little effect on reducing poverty. Raising the minimum wage would have a negative influence on our country. 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