On the date of July 18th, 2019, The US House of Representatives passed an amendment to raise the wage Act of 2019, which will allow an increment to the minimum wage to $15 an hour by the year 2025.
The federal minimum wage at the present is $7.25 an hour which has not been increased since 2009.
As Joe Biden won the presidential election in November 2020, there might be closer on the federal bill of Minimum wage of $15 an hour which brings pros and cons to the discussion.
|Pros of the Minimum wage increment to $15 hourly||Cons of the Minimum wage increment to $15 hourly|
|Standard of living||Increased prices of goods and commodities|
|Will lift many out of poverty||Effects on the minimum wage earners|
|Boost in the morale of the employee||Increase in jobless people|
|Effects on retention and hiring cost||Impacting the newbie’s|
|Boost in economic growth||Difficult for small businesses|
|Increase in demands of goods and services|
|Less Aid is needed from the government|
Pros of the Minimum wage increment to $15 hourly
Standard of living–
The increase in the minimum wage can affect the standard of living in a huge way. Higher-income will improve the overall standard of living.
Proponents argue that the changes are important and needful to keep up with the increasing cost of living. These days everyone wants something extra instead of the same boring life but fail to achieve it with the fast pace and low income.
This increment might help a lot of people to keep up with the standard cost of living.
Will lift many out of poverty–
The maximum population of the country in under the poverty line as because they are not able to earn daily standard life to be the least. There are people who are not as educated to work in big companies and earn huge wages.
They end up sacrificing a lot of day-to-day essentials because of the low income. The increment might help these people to be healthy and happy on a daily basis.
Congressional Budget Office (CBO) report of 2019 projects a significant improvement in the standard of everyday living of at least 17 million people with an assumption of a minimum wage of $15 an hour, which also includes 1.3 million people to be lifted out of the poverty line.
Boost the morale of the employee–
There are intangible benefits as well which can result in huge tangible benefits. An employee will surely get a boost from the increased hourly wage and try harder to justify their earnings.
Owners of big Businesses find it complicated to provide sufficient encouragement to the employees and labors to put maximum effort to their job and duties.
This is a problematic thing particularly with the low-wage workers to are always demotivated thinking the wage isn’t paying enough to keep up with the pace of the market.
Effects on retention and hiring cost–
Boosting employee morale can easily turn into more and more tangible benefits. If the employees put down the papers because of their low income, the owner can easily retain them by offering a higher wage.
This will also help in decreasing the hiring and training costs of a company. Employees who are more inclined and have planning to stay and grow with the company can benefit from the advancements and end up saving on relocation expenses.
Boost in economic growth–
Potentially, another advantage of increasing the minimum wage to $15 is a boost in economic growth as consumer spending will increase typically along with higher wages.
The higher minimum wage will put more discretionary dollars in the savings of millions of workers which will then be flowing to the retailers and other businesses.
Increase in demands for goods and services–
The increase in the wage will surely push the need of more and more goods and services as the low-wage employees will no longer have to sacrifice essentials and goods they cannot afford.
People will surely take benefit of the higher income by fulfilling their everyday needs which they have been sacrificing which will lead to an increase in demand of the goods in the market.
Less Aid needed from the government–
Nowadays maximum of the public and population is below the poverty line which leads to the need for more and more help and aid from the government.
If the maximum population is lifted up the poverty line, they will end up paying for themselves rather than taking help from the government.
The government can also use the resources and saved up amount in a better way and can make many other improvements.
Cons of the Minimum wage increment to $15 hourly
Increased prices of goods and commodities –
Increasing the minimum wage can probably consequence businesses to increase the price of their goods and services, thus fuel inflation might occur.
Opponents argue that increasing the minimum wage might result in increased wages and salaries across the board, thereby significantly increase in operating expenses for the companies which will then end up increasing the cost of the products and services.
They will be forced to do so to cover the labor costs.
Effects on the minimum wage earners –
The increase in prices of all the products and services means a general increase in the cost of living.
Again, the definition of the standard cost of living might change according to the market which will fundamentally have and negative impact of the advantage earned by the workers of having saved up dollars in their pocket.
Although In the US the minimum wage is still $7.25 per hour, there are other 29 states and D.C. that have approved higher minimum wages.
Increase in jobless people–
The increment in the minimum wage also projects towards an issue of potential job losses. Many experts and economists point out that labor is the major cost of doing any business, big or small.
Businessmen and companies will be forced to cut out employees to match the market situation in order to maintain profit.
They will end up outsourcing the job to less expensive laborers outside the country.
Impacting the newbie–
One significantly negative is that an increase in the minimum wage would result in increased labor competition for minimum wage jobs.
The net outcome of an increased minimum wage may become a large number of over-experienced workers taking minimum wage seats that would normally go to the newbie who is less experienced in the market.
The new people will end up losing the opportunity to gain any experience and move ahead with their careers.
Difficult for small businesses–
The increase in the minimum wage might affect the small businesses more than the bid businesses in the long run.
The revenue of a company might give them a plus point in keeping up with this regulation, however, for the small business, it is way difficult to pay the laborers the high minimum wage as they have a very small margin of profit normally.