The Problems With A $15 Minimum Wage

The House of Representatives recently passed a bill that would raise the federal minimum wage to $15 per hour, up from the current $7.25. What are the chances that this goes into effect and what would that do to the U.S. economy?

A few weeks ago I read a comical headline of a story that leaked from the Bernie Sanders campaign. “Bernie Sanders Plans To Cut Staffers’ Hours to Pay $15 Minimum Wage”. Wait a minute. I thought that raising the minimum wage wasn’t going to have a negative effect on the economy because those greedy rich people have the money? Why would Bernie need to cut staff hours if a $15 minimum wage will have no negative effect? Keep in mind that he is choosing to raise the wage among his staffers and isn’t being forced to. 

What is currently going on inside the Bernie Sanders campaign is just a foreshadow of what will soon be coming to a store near you, if this bill were to take effect. A $15 minimum wage that would force business owners to significantly cut back on employee hours, lay off employees and replace them with robots, and raise prices to cover the cost. You don’t have to look anywhere further then cities like Seattle who have tried it and are suffering the consequences. 

Immediately after the minimum wage increased in Seattle from $11 to $13 in 2016, employers cut hours by 9% and workers earned $125 less each month, according to a report from the University of Washington (UW). The hike hasn’t been completed just yet. Employers with less then 500 employees were required to raise their minimum wage to $15 for all employees by January 1st of this year, with companies that have more then 500 employees being required to raise their minimum wage to $16 by 2021. It’s still too early to tell what effect a $15 minimum wage will have on Seattle but so far it’s not looking too good.

As someone who supports a limited federal government, I fully support cities and states having the right to experiment with raising the minimum wage. I would go as far as saying that there should be a $0 federal minimum wage and states should have the right to set their minimum wage for anything they would like. If Texas wants a $5 minimum wage and California wants a $20 minimum wage, they should have that right, as they also have the right to suffer the consequences in both states. Let the free market work the ways its suppose to and force businesses to compete for you. If a business offers a wage that’s too low, then people will go to work for the company down the street that offers them more. 

There are several problems with the federal minimum wage, in particular.

  1. The federal minimum wage doesn’t take into account that different regions have different costs of living. The cost of living in New York City is much higher then the cost of living in small town Iowa, yet the federal government wants to force small town Iowa to pay the same wage as businesses in New York City. Politicians in DC like to use the “living wage” slogan, but fail to recognize that the cost of living isn’t the same across the country. While many businesses in New York City might be able to afford a $15 minimum wage, many businesses in small town Iowa can’t and will be forced to close their doors. 
  2. Everyone can agree that the average person can not live on $7.25 an hour and you aren’t suppose to be able to. A minimum wage is meant to be a starting point, not a career. With a $15 minimum wage there is absolutely no motivation to work hard and climb your way up the ladder if you are getting paid the same on the top rung as you do on the bottom. It’s also not fair to the current employees, who have been working with the same company for decades, who will not be able to get a raise because of the company being forced to double their pay for new employees. 
  3. Who exactly determines what a living wage is anyways? Like I said earlier, the cost of living varies greatly by things like location. If I want to live in an expensive community, should a business be forced to pay me enough to live in that location even though I chose to live there? What needs exactly are covered in this living wage? Does a married couple need a second car when it wasn’t that long ago when an average family only had one car? What if I need $50 per hour based on where I live? Should my employer be forced to pay me $50 per hour? If me and my wife chose to have 10 kids, should my employer be forced to raise the minimum wage high enough for me to be able to afford to support them?  At one point, if ever, should personal responsibility begin to play a role?

Thankfully, we aren’t at that point of a $15 federal minimum wage just yet. The bill did pass the House but is very unlikely to pass the Republican controlled Senate. If Democrats do win in 2020, I expect this new minimum wage bill to pass quickly, and the economy will suffer greatly because of it. 


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