A higher minimum wage would hinder businesses

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Mark Boster/Los Angeles Times/TNS

Chase Kleinhenz

The federal minimum wage currently sits at $7.25 an hour. The recent movement in America for a more than doubling of the minimum wage will be detrimental to our society and result in a massive wave of unemployment for unskilled, low-wage workers.

Simple economics tells us that if you increase the minimum wage then employers will not hire as many workers to deal with increasing costs. If they aren’t hiring, then more people are out of jobs.

What if we do raise the minimum wage to $15 an hour?

At this high wage, very few of us would be worth employing. It is sad to say that the same people — low-skilled workers — who are calling for more than doubling the minimum wage are the same people who will be harmed and lose their jobs to higher or more experienced workers, or even machines. To think of it in simple numbers, let’s say I run a business. I can hire two workers at the current minimum wage and two people apply: one low-skilled worker and another with a college education.

Suddenly, the minimum wage is raised to $15 an hour, double what it is now. As a small business owner, this means I can only afford to hire one of those applicants now. Which one will I choose?

The one who will maximize my productivity. Now let’s say I need two employees to run my business, so I hire both employees. In order to deal with the more than doubling of my costs of employment, I now must charge higher prices. Now, nobody wants to buy my product at it’s higher prices. I’m losing money, and I go out of business. The only way for me to stay in business would be to find a way to decrease my costs.

If I were a fairly large firm looking to maximize my profits and decrease my costs, I could outsource and take my company elsewhere, like so many other firms are doing and have done, further decreasing available jobs to low-skilled Americans. For $15 an hour a person, it may be cheaper for a company in the long run to purchase a machine to do all the work instead of a human being.

A look into Seattle, where the minimum wage has been set to $15 an hour, reveals how much of a hit these business, and subsequently, employees take.

Only approximately 1,500 workers, a very small amount, are benefitting from the rise in minimum wage in Seattle. Even with this small increase, small businesses, specifically restaurant owners, have been hit very hard.

Employers have expressed major concerns, stating they must raise menu prices, use cheaper and poorer ingredients, reduce operating hours and reduce labor.

Restaurants in the area are closing, which in turn leaves more people unemployed than if the wage were at the federal level. It is not destroying the economy of Seattle, but the point is that businesses take a hit and more people are unemployed. The arguments for minimum wage increase come from a desire to raise the living standards of the lower class, but it simply does not work.

These people are saying that they absolutely must have $15 an hour to live and meet the demands of life.

The truth is, $15 an hour would put a full-time worker in the top 1 percent of the worlds’ wealthiest. There must be real economic growth to raise the living conditions for these people.

Raising the minimum wage is not the answer.