Minimum Wage

The United States recently reached a dreadful record relating to COVID-19 — 400,000 Americans have died. On top of that, over 100,000 businesses have closed due to lockdowns, and over 12 million people are still out of work. Some are calling for drastic economic measures to combat some of these repercussions. I am here to tell you that a $15 minimum wage should not be one of the answers. 

President Joe Biden has released his COVID-19 relief plan, and one of the staples of that proposal is to more than double the current federal minimum wage. At first glance you may be thinking something like, “What’s the problem with a $15 minimum wage? I would love to get paid that much at my job!” And I don’t blame you for thinking that. However, this increase could lead to your not having that job at all. 

The Congressional Budget Office predicts 1.3 million jobs will be lost by 2025 if the minimum wage is raised to $15. Millions of jobs have already been lost due to this pandemic, so why would we want to enact a policy that will only add to that somber statistic? 

Something else to keep in mind are the small businesses facing unprecedented times. As previously stated, over 100,000 businesses have shut down since the start of this pandemic and the lockdowns brought along with it. Struggling businesses are already struggling to  make ends meet to keep their doors open and pay their employees. 

Let’s say your local coffee shop has four employees, they get paid the current minimum wage and each works 25 hours a week. That would mean each employee is making about $182 a week for a total of $725 a week for all of them. Now, if the employer was required by law to pay each of their employees $15 an hour, that would mean each employee gets paid $375 a week, totalling $1,500 a week. That is more than a 100 percent increase in what the employee has to be paid. 

The sad reality is that money does not grow on trees, and employers know this better than anyone. With that being said, where do you think businesses that are already struggling are going to find this money? I can tell you how it will start.

First, businesses will raise prices for their products. That $5 large almond milk cold brew that has become a part of your morning routine will go up to around $7. That killer chicken burrito bowl from Chipotle will go from $8 to $10. But wait! Everyone is making more money, so you can afford it — duh! Not so simple, because I doubt the people who will lose their jobs due to this drastic pay increase will feel the same way —  which brings me to my next point. 

Businesses are either going to start letting their employees go, or hire fewer of them, because they cannot afford to keep them on the payroll. For example, a growing trend among major corporations has been an increase in self-checkout devices. Amazon even has a store that has shopping carts that scan your items when you place them in the shopping cart. If businesses are forced to pay more than double what is already required of them, they will start to opt out of human services to technological ones simply because they can, and it’s cheaper. 

Simply stated (ha), now is not the time to more than double the federal minimum wage. A more reasonable approach would be to raise the required wage to $10 rather than $15. This would still help people be lifted out of poverty without having an atomic-like ripple effect on the entire economy. 

With businesses closing and people already losing their jobs, this increase will only add to the fiscal burden American business owners are already facing. It makes no sense. It is irresponsible and lacks an understanding of basic economics. 

Sam Somogye is a political science senior and columnist for The Battalion.

 

(2) comments

Galivan

Well written article, Sam Somogye. Rational, logical, and intelligent opinion articles have become a rarity on the pages of The Batt. I salute you.

Lambpa

So refreshing to see an intelligent article using real "truth and science" instead of woke rhetoric! The world desperately needs more rational poli-sci majors who can actually question public policy using "good, sound" logic instead of "good sounding" logic.

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