The COVID-19 pandemic has affected the economic landscape in a way that can be seen as unprecedented. Small businesses have felt a lot of the stress of trying to provide for their families and their employees. The unemployment rate went up, food insecurity increased, and the national landscape changed in a new way. Money and the cost of living have been on people's minds before the pandemic, but the severity of this new landscape has made that thought louder. The previous article: “The impacts of increasing minimum wage,” addresses the concerns many Americans have with raising the minimum wage from $7.25 to $15, but many of those concerns have been researched, and found to be smaller negatives over the overwhelmingly positive effect.
According to the US Department of Labor (DOL), the last time the minimum wage was raised was in 2009. The cost of living has only increased since then, close to 17%. There is an extreme disparity between the minimum wage and the current cost of living. The main argument of the previous article, and the argument of many people who voted against minimum wage on March 5th, is that employers would have to cut jobs, especially smaller businesses. However, a 2019 study from the Congressional Budget Office found that raising the federal minimum wage up to $15 an hour would actually boost earnings for 70 million people. It was addressed that it could lead to job losses for close to 1 one million Americans, but the overall poverty level would be reduced greatly. The conversation is also much more complex than just raising it, coupled with increased governmental social programs it could raise the quality of life for many people in the United States.
Many small businesses are concerned about the raising of the wage, but a lot of small businesses in many states actually pay their employees more than the minimum wage already. Looking at the numbers from the D.O.L, 23 states have wages higher than the minimum wage. The wage average is close to nine dollars. A minimum wage increase wouldn’t be an extreme difference from the average number that many businesses are paying their employees. Furthermore, the definition of a “small business” in the United States is a contested one. Using the same source as the previous article- the U.S. Small Business Administration, companies that make as much as 35 million dollars in sales and close to 1500 employees are still counted as small businesses. This detracts from the “mom-and-pop” image in many people’s heads.
Additionally, according to economists at the University of Massechutess, the minimum wage raise would barely hurt business. Prices would rise, but only a small amount because the earnings of minimum wage workers actually only make up a very small section of the overall economy since they are the lower paid workers. Fewer workers would also be less likely to leave jobs, benefitting smaller businesses. This is due to pay security. It is also important to note that many restaurant employees who rely on tips make less than $5 an hour. They rely on tips to make the full $7.25. By raising that number it could help support those workers, many of whom are now essential workers during the pandemic.
A key thing lost in many of the arguments against the minimum wage change is this fact: Many people who support the wage raise want it to be incremental. The real argument is whether or not we want that increase to happen in the next five years- not immediately. There is more than a sufficient amount of time to adjust. As for the social effects of a minimum wage change, those changes are positive as well. It would also boost income for people of color since nearly 1/3rd of African-American workers and 1/4th of Latino workers would see raises. This would help to start to fix some of the disparity that is seen in the wage-race gap. According to the Economic Policy Institute, their research has shown that a $15 minimum wage would begin to reverse decades of the growing pay inequality.
To look at the scope of raising minimum-wage you must weigh the pros and cons, but you also need to look at the situation in a much broader scope than just one or two leaves on the metaphorical branch. The benefits of a minimum wage raise cannot be understated, and many studies have shown that it will have a more significant positive impact than negative. In order to raise the quality of life in the United States, raising the minimum wage is a great place to start.