Min. Wage Hike Comes Back to Bite Us in the Butt

The appeal of a near doubling of pay to a minimum wage worker is understandable, but economists say that their plan is poorly thought out and would bring about disastrous results if they win this battle. For starters, many corporations that employ a large number of minimum wage workers are subsidized by the federal government in the form of welfare to make up the difference in what a job in fast food pays and what the employees cost of living is. If the employees’ hours don’t get cut, with the extra money they’d earn, many would become ineligible for government assistance. They’d break even, if not lose money. 

It wouldn’t save the taxpayers money by passing on the costs to the corporations either. What happens when businesses are forced to pay employees an artificially inflated wage is they up their prices. They lay people off. Those people then need more welfare than they were getting before, because they just went from making some money to making none. For the employees who keep their jobs, the price of basic goods has gone up to reflect their increased pay, so their purchasing power doesn’t change. They’re in the same boat. 

But now, recent college graduates in entry-level professional jobs, experienced workers, and store managers who were making about $15/hr anyways are in big trouble. They just went from a modest wage, but one they can survive on if they have a second job for a little extra money, to minimum wage.