Raising Minimum Wage

Raising the minimum wage has been proposed to the government and many people believe that it will          boost the economy and give people the money that is needed nationwide.  According to Bill Dunkelberg, chief economist for the National Federation of Independent Businesses, every dollar must come out of someone's pocket and raising the minimum wage is not a logical way to add increased spending to the economy.  Dunkelberg continues by saying "It's not the job of businesses to turn themselves into social service providers and pay in excess of value to the firm," and  "We do have something called the earned income tax credit, where we provide supplemental income to people who are working but need more money."  

It seems obvious that, because of the day in age in which we live, raising minimum wage further would do nothing but put more businesses in a situation in which they could no longer afford to employ people.  By simply increasing the minimum wage, all the government is doing is telling businesses to give their employees money that they don't have or that they may have otherwise used in other ways.  By doing this, the people that stay employed will undoubtably get payed more, but it also seems very likely that unemployment could skyrocket.  The reasoning for this is seen in our economy and business world today.  When a company can no longer afford to employ someone, they must have to unemploy them, leaving the person without a job and no income whatsoever.  The problem with this assumption is that there is little data to back it up other than the current economy. In the current economy, we see something that, in my opinion, is enough to negate a higher minimum wage.  The fact that when a company or small business cannot afford to hire someone, they don't.  When the government increases minimum wage, they are asking business owners to take more out of their income, more money that can go back into the business, more money that could be given to more people, must now be given to fewer people.  Paul Krugman, an economist and fan of raising minimum wage even admits " Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems."  

So, although there may be little evidence that raising minimum wage would indeed affect unemployment and inflation,  basic economics shows that it very likely will.  


http://www.washingtonpost.com/blogs/fact-checker/wp/2013/12/05/obamas-claim-that-there-is-no-solid-evidence-that-boosting-the-minimum-wage-harms-jobs/  

http://www.npr.org/2012/07/08/156458470/raising-minimum-wage-a-help-or-harm

http://inflationdata.com/articles/2013/03/03/raise-minimum-wage-trigger-inflation/