The many disadvantages of an increase in hourly minimum wages

An hourly minimum wage law theoretically guarantees a baseline level of compensation designed to avoid exploitation of labor in the short run but inflation eventually reduces this advantage and unfortunately does not guarantee a minimum standard of living everywhere in the nation, especially in expensive areas where someone may have to work at two or more minimum wage jobs to maintain a minimum standard of living.

Income inequality is only temporarily addressed due to a yearly federal inflation rate of more than 2%. A living wage is not guaranteed in every region or state, especially where the cost of living is high.

Productivity and retention are mainly improved by businesses increasing an employee’s wage once they have proven to be productive so they will have less intention of moving to another job. If an employee is not productive then you don’t want to retain them on the job and will look for ways to fire or terminate the employee.

There are few social benefits to the minimum wage for families since unhealthy close-to-starvation diets and ultra-frugal living can’t properly support a family, even if both spouses work. This is a primary reason why many young minimum-wage couples choose not to marry in the first place and have no children.

Raising the minimum wage does lead to some job losses in industries heavily relying on low-wage labor. In small businesses making a minimal profit, they may be forced to cut a few employees, reduce working hours, or go bankrupt. This often also results in higher turnover and additional costs in training newly recruited employees.

Businesses facing higher labor costs often pass on these expenses to consumers through higher prices, leading to inflation and eventually negating the benefits of a higher minimum wage.

Higher labor costs make some businesses less competitive globally, especially in industries where international competition is fierce.

In response to higher labor costs, some businesses may invest in automation and technology to replace low-skilled workers, which could further increase job losses and lead to a rise in local unemployment.

One-size-fits-all minimum wage policies often do not account for differences in living costs between regions, leading to hardship in regions with low living costs that now become higher.

Minimum wage increases can have unintended consequences, such as reduced working hours, cut benefits, or increasing unemployment. Poor neighborhoods, instead of benefiting from a minimum wage increase in the long run, pay for it in increased commuting prices, rent increases, higher food and drink costs, and an overall cost of living increase.

Businesses with apprentice and job training programs are hurt financially if they are forced to pay unskilled workers an increased minimum wage. Minimum wage entry-level jobs are harder to get because most businesses are unlikely to hire young adults with no previous job experience.

It is a myth that an increase in minimum hourly wage benefits the poor the most. Poor neighborhoods struggling to survive, unless they are on total welfare, bear the brunt of higher prices in businesses located within or on their borders. Poor neighborhoods have food to buy, rent to pay, clothes to purchase, and commuting to do (which often means an increase in transportation costs). Regions or neighborhoods without a mixed economy, without a wide variety of jobs or a high number of minimum wage jobs, suffer the most.

In conclusion, a higher national or regional increase in hourly minimum wage does lead to a guaranteed increase in inflation nationally or regionally and means a drop in the value of what a dollar can buy. Other than a temporary increase in the wages of minimum wage workers nationally or regionally, the long-term benefits are realistically nonexistent.

Image: Free image, Pixabay license, no attribution required.