Why a $15 Minimum Wage Doesn’t Work

The minimum wage is one of our country’s most controversial topics. In recent years, workers advocating for a raise have brought the subject into the national spotlight. Three major cities—Seattle, San Francisco, and Los Angeles—have voted to phase in a $15 minimum wage over the coming years. With the considerable amount of opinions, the facts can become clouded and obscured.

Contrary to what advocates believe, it will not have a favorable outcome. It will result in an obvious initial boost in low-wage workers’ pay, which will be followed by substantial job losses and increased consumer prices.

Let’s say there is a restaurant that employs 15 workers, and pays them Virginia’s minimum wage of $7.25 per hour. If they all work normal hours, it takes $4,350/week to pay them all. If the minimum wage were raised to $15 that weekly cost of $4,350 would rise to $9,000.

Do the math. That would give the restaurant an additional yearly cost of over $240,000. A great deal of small business owners don’t even make that annually. This specific scenario doesn’t necessarily apply to businesses everywhere, but the same principles apply.

Many businesses will not be able to afford this increased cost. Furthermore, a great deal of the businesses that would be able to handle that increase would prefer not to do so. In order to continue operating, businesses may increase the prices of goods and services they offer, lay off employees, and increase the workload of the remaining workers.

In May, San Francisco began the process of implementing a $15 minimum wage by immediately raising it to $12.25—a 14 percent increase. Chipotle proceeded to raise the prices at their San Francisco locations by as much as 14.4 percent.

Businesses are always looking to terminate redundant tasks. Various practicable forms of automation technology are just around the corner. A touch-screen computer will soon replace the process of verbally ordering your Big Mac. Your local Taco Bell cashier will soon be swapped for a small, compact device where you punch in your order and swipe your credit card.

If a $15 minimum wage were put into place, a significant amount of businesses will not hesitate in replacing certain jobs with this technology. After all, many won’t have a choice but to do so.

Some studies state that an increase in the minimum wage would increase employment, while others concluded that it would have the opposite effect. This lack of consensus means we have to resort to common sense and logic. A $15 minimum wage will only make it harder to attain prosperity.

Our country is the land of opportunity. If you work hard, it is very likely that you will be rewarded. While the path to higher wages does not entail raising the minimum, please take heart in the fact that your current occupation is merely a stepping stone in your journey of life—by no means is it the final destination.

Life is what you make of it. Make something good.

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One thought on “Why a $15 Minimum Wage Doesn’t Work

  1. Very well said. Not everyone should start expecting higher wages the minute they get a job. It would be more rewarding to work hard and eventually get higher pay.

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