Raising minimum wage will harm small businesses

By Brayden Lennart
Staff Reporter

During the 2016 United States presidential election, many politicians discussed raising the minimum wage, especially the famous Vermont Senator Bernie Sanders (D). He, as well as many other politicians, have discussed possibly raising the minimum wage for Americans, and many people in the United States believe that raising the minimum wage would be a good thing for American citizens. However, not many people can recognize the negative consequences that would come along with a minimum wage increase, such as people losing their jobs and inflation.

Raising the minimum wage will make the job market more competitive than it already is and hurt businesses because they have to pay their workers more. California has decided to slowly raise their minimum wage from $11 to $15 over the next three years. According to an article from the Sacramento Business Journal, Andrew Smith was the owner of a small business in Sacramento called the Bread Store and said that he had to close his business due to the recent minimum wage increase. “As soon as the minimum wage goes up, everything goes up — workers’ comp, payroll tax… it’s not just a couple dollars of an increase,” Smith said to the Sacramento Business Journal. This is just one example of how a higher minimum wage can be detrimental to small business owners and the community alike. Many other small-town business owners could be forced to shut down because they can’t afford to pay their workers.

According to the United States Department of Labor, states with a lower minimum wage typically have a lower unemployment rate. For example, the top three states with the lowest unemployment rate have a minimum wage of $7.25.

Not only can a higher minimum wage hurt current businesses, it can be a deterrent for future business endeavours from happening where the raise occurred. According to the Greater Sacramento Economic Council, an Amazon supplier company pulled out of a deal that would have brought roughly 800 jobs to the community. Companies need to make money, and they don’t make money when they have to pay their employees higher wages. If we raise the minimum wage, many communities and families could suffer and miss out on opportunities.

Many people believe that if people are making more money, they will be better off and more financially stable. This is true for some people, but not all people. The higher minimum wage will increase unemployment which is apparent in states with a higher minimum wage, such as California. According to the Bureau of Labor Statistics, California’s unemployment rate is 4.3 percent, ranked number 39 in the country, which is very high in comparison to other states.

The people who do get the jobs that have a higher minimum wage will still have to deal with the general increase of prices and decreasing value of money, which is known as inflation. It is called a “minimum” wage because it is meant to provide the basic necessities in life, and it does not need to be higher than it is.

Many believe that raising the minimum wage will be beneficial for the economy and the American people, but the evidence that has been collected by professionals says otherwise. Businesses are unfairly forced to shut down because they simply can’t afford to pay their employees, and the people lose opportunities from potential employers who are deterred from areas with a higher minimum wage. Nobody needs to be paid $15 an hour to flip a burger.

The issue will still remain heavily debated, but people need to simply take a look at the statistics and posses an understanding of economics. Then they will understand that we shouldn’t raise the minimum wage.


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