By 2025 it is estimated that a $15 minimum wage would reduce employment by 1.4 million workers
The debate of a $15 minimum wage has been in the news lately and seems to be a talking point for most politicians. However, taking politics out of this, would this truly be better for the United State economy? According to statistics there are approximately 1.7 million workers who work for minimum wage. That is approximately 2.3% of US workers. The industry that employs the most minimum wage workers is leisure and hospitality. Frankly, the industry that has been hit hardest by the pandemic. Raising the minimum wage to $15 would more than double the US Federal minimum wage of $7.25.
There are people that believe that by increasing the minimum wage this would help to stimulate the economy by giving workers more money that they spend which could very well be the case. This could also allow some workers to provide a better livelihood for their families. However, by implementing these changes this could cause sweeping job cuts and reduction in the work force. When talking to several business owners they were very opposed to this proposition because of the impact it would have on their workforce. They expressed that by doubling the minimum wage this would cause business owners to have to cut back on their staff. Not only would this cause stress for the employees that are laid off, but also added stress for the remaining staff. The reduction in employees would force workers still employed to take on extra duties and responsibilities that they may not have had to do before. This would also cause many to wonder that if they are laid off, where could they find additional work.
A doubling of the minimum wage could be a big hurdle for companies that are struggling to make it through the pandemic. This would cause them to close their doors. Another effect of this would be the increase in much of the food and products we eat and use. Many believe this would cause widespread price increases making it harder for families to afford basic goods. Some companies in the private sector have taken it upon themselves to issue their own minimum wage, such as Amazon and Walmart that have implemented $15 minimum wages. These companies have the size and scale to increase minimum wage. Other companies have already started to increase automation and the use of machines to run their business. Simply look at the self-checkout lanes and ordering kiosks to see what the future could look like.
Below is an article that shows what other financial advisors have to say about a $15 minimum wage.
This is a recent study by the Congressional Budge Office that goes into details about what a $15 minimum wage would mean.
https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage.pdf
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