The current Democratic front-runners in the 2020 presidential race, Amy Klobuchar, Elizabeth Warren, Bernie Sanders, Joe Biden, and Pete Buttigieg, each hold common ground on one particular policy: Raising the minimum wage to $15 an hour.
Though this glamorized utopian idea of increased hourly pay appears ideal, it is a ruse in every right. When examined closer, it will harm rather than help the American people as a whole.
According to a 2019 study conducted by the Congressional Budget Office, increasing the federal minimum wage from $7.25 to $15 an hour would boost the income of 17 million Americans but would additionally put an astounding 1.3 million individuals out of work.
This is one of many reasons that 75% of U.S.-based economists advise against the jump from $7.25 to $15 per hour.
Economic theory suggests that the higher the wage is, the less quantity of labor is actually needed. Simply put, labor becomes pricier to carry out for businesses which acts as a hindrance when providing sufficient, workable hours for employees.
The emergence of a higher federal wage realistically produces an increased demand for jobs due to the allure of profitable gain. But, as work opportunities become limited due to heightened expense, the notion of offering more jobs is made more difficult for companies that are not willing to spend additional amounts.
These two factors create a paradox which calls attention to failure of the chief reason for raising the minimum wage: Aiding those who are not able to properly provide for themselves with current wages.
Although, if you are trying to survive solely on minimum wage, your financial and living situation is much more severe and goes beyond the aspect of the minimum wage dilemma.
Again, because of improved pay, more highly skilled applicants apply to traditionally lower-skilled jobs and these higher-skilled people then replace lower skilled workers because employers want to hire those with more skills instead.
Outside the realm of labor issues is the concern with the amount of profit that is accrued by companies.
According to the Heritage Foundation, most firms employing minimum wage workers are small businesses that have low profit margins, which represents the percentage of sales a company has translated into profit.
Therefore, businesses will be obligated to raise prices in order to continue proper profit margins.
With a rise in prices, a domino effect takes hold and it is projected that customers will buy less product, which equals less sales as a result.
I challenge any supporters of raising the federal minimum wage, especially young people, to re-evaluate their stance based on the economic problems and employment strife it brings.
Throwing more money into the game does not always equal an improvement with current circumstances. The historic economic record and with its reams of research only confirm such findings time and again.