Minimum wage is a controversial topic that has people divided. Some believe that it helps protect the rights of low-wage workers, while others believe that it is detrimental to the economy.
I believe that it is not only stupid, but it hinders job growth, keeps people in poverty, and stifles economic growth. There are plenty of examples that demonstrate why I believe this to be true.
Minimum Wage Hinders Job Growth
The first, and most obvious, reason why minimum wage is a flawed policy is that it hinders job growth. Employers will not hire as many people if they cannot afford to pay them a higher wage.
This will lead to higher unemployment rates, which will worsen the economy.
I am sure you have noticed the self-checkout growth in grocery stores and fast food joints. This will only become more common.
People's jobs will be replaced by robots.
Several economists and business leaders who note that labor is a significant corporate expense contend that companies will be obliged to reduce employment in order to preserve profitability.
Additionally, employers will also avoid hiring people with less experience or fewer skills because they cannot afford to pay minimum wage.
This means that young people, who are just starting in the workforce, will have a harder time finding work. In the end, minimum wage hurts the very people it's supposed to help.
Keeps People in Poverty
Minimum wage does not help alleviate poverty – it perpetuates it. The reason is that the wage is not tied to the cost of living, and therefore, does not reflect the actual needs of people.
For example, someone making minimum wage cannot afford to live in many cities where the cost of living is higher.
It also discourages people from furthering their education or acquiring additional skills because they can make the same amount of money by working a minimum-wage job.
Instead of providing an incentive for growth and improvement, minimum wage stagnates people's earning potential.
Price increases result in an overall increase in living expenses, which could effectively offset any benefit that workers could have from having more money in their pockets.
Makes Business More Expensive
Minimum pay policies can raise the cost of doing business, leading to higher prices for consumers.
Companies that cannot afford to pay their employees the minimum wage may have to raise prices to compensate for the added expense.
This, in turn, affects those living in poverty who cannot afford to pay extra for goods and services.
Higher prices may also lead to a reduction in demand, which can have a negative impact on businesses. This can result in lower profits, which in turn can lead to layoffs and reduced hours for employees.
Stifles Economic Growth
Minimum pay is also a roadblock to economic growth.
It hinders business expansion, job creation, and production. This is because companies are forced to pay a higher wage, even when it is not sustainable for their business.
As a result, businesses may not be able to invest in new technology that could increase productivity or hire additional employees that could help the business grow. This, in turn, reduces economic activity and slows down the economy.
Another way minimum wage stifles economic growth is by creating a disincentive for businesses to locate in high-cost regions.
Companies may choose to relocate to states or areas without minimum wage laws so they can pay lower wages.
This can result in an economic imbalance between different regions and discourage some businesses from taking risks that could create job opportunities.
Is Minimum Wage Bad?
In conclusion, this idea is a flawed policy that hinders job growth, keeps people in poverty, makes business more expensive, and stifles economic growth.
Setting aside arbitrary minimum wage standards in favor of a more progressive wage rate is the key to a robust economy. As people, let us stimulate businesses and work together to create a world that supports healthy competition and opportunity.