One of the pros of increased minimum wage is increased pay for low wage workers. Obviously. Another pro of increased minimum wage is that it decreases the effects debt. If you have debt and your pay doubles and your expenses (besides debt) double you will have twice as much money left to pay off your debt.
So if you were using all your money that is left to pay off your debt and you had say $50,000 you would be able to pay off the debt twice as fast as shown in the table above. This is why I have changed my mindset from no debt to leveraging debt to your advantage.
There are many cons to increasing minimum wage. One problem with increasing minimum wage is increasing costs for products that are produced by minimum wage workers. Most people would not be happy if McDonalds changed the price for a Big Mac from $4 to $8. With increased cost of products your savings are now worth a lot less. For example, before you could use your $2000 in savings to buy 500 Big Macs at $4 now you only buy 250 Big Macs at $8. This would hurt those that have no debt and have been trying to save money the most because they would have put in all that work to save the money and now it is worth half as much. Another downside to increased minimum wage is lost jobs because with increased wages, for a business to continue to be profitable they must either increase revenue or decrease costs. One easy way to decrease costs is to remove workers, as often wages are one of the highest costs for a business. Another way to decrease costs is to move jobs to a lower wage region. For example, if the state of California increases minimum wage to $15 but Nevada still has a minimum wage of $8 the company may hire employees in Nevada instead of California where possible, this also happens with outsourcing work to lower wage countries as well. Another problem with increasing minimum wage is that workers of higher paying jobs that are now only earning minimum wage will not be happy because they have basically gotten a pay cut unless their wage increases at a similar rate. If the rate of higher paying jobs does not increase there could be an influx of educated workers looking for lower class jobs as the minimum wage jobs may be easier than the jobs they currently have. If the rate of higher paying jobs does increase we would be back to where we started in the first place except that we have devalued the dollar compared to other currency. If we devalue the dollar to other currency than it will be a lot more expensive to import goods that the US is so reliant on.
If you don’t like earning minimum wage you need to find a need job or prove that you are worth more than minimum wage. Most companies are willing to pay their employees what they think the employee is worth. For the most part minimum wage jobs are not meant to be careers that someone supports a family on but instead a starting point for gaining experience and getting started in the job market. As shown above there are a lot more cons to increasing minimum wage than pros to it.
What do you think about increasing minimum wage? Leave a comment below.