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Economy at risk with minimum wage increase

In 2013, President Barack Obama gave a call to action to raise the minimum wage. States have been jumping on the bandwagon and signing bills to increase the minimum wage requirements ever since then.

The most recent states to comply are California and New York, whose governors each signed bills this past Monday to gradually raise the minimum wage to $15 per hour by the year 2022. Many people were ecstatic for the new bill while others, especially small business owners, cringed at the apparently disastrous idea.

“I live in California and have a minimum wage job. I do not agree with raising the minimum wage. I think that raising minimum wage is just going to raise the prices of everything else and the cost of living in California is already extremely high,” said ORU freshman Jordan Miner.

On the surface, this new bill may seem like the best thing that could pos- sibly happen to Californians and New Yorkers, but the results won’t be what people are expecting.

The U.S. Bureau of Labor Statistics evaluated Seattle’s minimum wage in- crease in 2015 and the results were less than stellar. Restaurant employment took a hit the same year Seattle in- creased its minimum wage. Over 1,300 jobs were lost. California and New York will be no different. Small businesses will also crumble under the weight of a mandated higher minimum wage.

“It’s gonna be hard,” said Pat Dimatos, owner of Ace Florist in Syosset, New York. “If you can’t pay the $15, then you’ll have to let people go. It’s a good thing they’re doing it, but I don’t know how many people will stay in business.” Dimatos only has six employees working at his small flower shop. He currently has no problems paying his employees, but he’s unsure of what the future might hold.

If businesses are forced to pay more than what they can afford, hours will be cut, full-time employees will be demoted to part time and workers will be let go. Hiring freezes will abound and the struggle to find a job will increase.

Another repercussion is higher prices for products. The United States Congressional Budget Office researched the effects of a minimum wage increase on employment and family income. The study found a higher minimum wage would result in a “scale effect.” This effect means the cost of the minimum wage increase is passed on to the consumer, increasing the cost for goods and raising the cost of living. People will start tightening up their wallets and spending less on products, resulting in the company making fewer products and ultimately hiring fewer workers.

Understand that businesses are in a sense paying for a worker’s labor. With so many employees to compensate, an employer isn’t going to overpay for certain jobs. Serving burgers, checking out people at Wal-Mart or sweeping floors is simply not worth $15 an hour. These are jobs that require little to no skill.

The fact many adults are trying to support a family on just minimum wage is unfortunate, but raising the minimum wage won’t remedy the problem.

It also covers an even bigger problem: there are too many people trying to support a family on minimum wage alone. Maybe instead of pushing for a higher minimum wage, government officials should look into equipping people with the resources they need to obtain higher paying jobs. Leave the minimum wage jobs to the high school and college kids.

Story by Victoria Atterberry

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