Benefits of a $15 an hour Minimum Wage

In 1938, the federal minimum wage was introduced under President Franklin D. Roosevelt. It was set at $0.25/hour back then, but has been increased by the Congress 22 times. The most recent increase was in 2009 when the minimum wage went from $6.55 to $7.25/hour. 

Some states have a higher minimum wage than the federal minimum. These states say that the minimum wage of $7.25/hour is not enough for anyone to live on. However, opponents say that many businesses cannot afford to pay their workers more than the minimum wage, and will thus be forced to close, go bankrupt, reduce hiring or even lay off workers.

There has been a lot of discussion in the past years about increasing the minimum wage to $15/hour. This increase is not 100% good and may create some friction in the economy, but for the most part the pros might outweigh the cons. The pros would propose the following:

  • Raising the minimum wage would increase economic activity and spur job growth.
  • Increasing the minimum wage would reduce poverty.
  • A higher minimum wage would reduce government welfare spending. 
  • The minimum wage has not kept up with inflation. 
  • Improvements in productivity and economic growth have outpaced increases in the minimum wage. 
  • Increasing the minimum wage would reduce income inequality.
  • A minimum wage increase would help to reduce race and gender inequality.
  • Increasing the minimum wage would have a ripple effect, raising the incomes of people who make slightly above the minimum wage. 
  • Increasing the minimum wage would increase worker productivity and reduce employee turnover. 
  • The current minimum wage is not high enough to allow people to afford housing.

Cons would propose that businesses would be forced to close, poverty would increase, low-skilled workers may be left without a job, prices for consumer products may rise to cover the minimum wage and raising minimum wage would increase housing costs.

Sources

Economic Roundtable - Effects of a Fifteen Dollar an Hour Minimum Wage in the City of Los Angeles

ProCon.org - Should the Federal Minimum Wage Be Increased?

Economic Policy Institute - Why America Needs a $15 Minimum Wage