One of the most publicized and controversial potential add-ons to the current Covid-19 relief bill was possibly more than doubling the federal minimum wage from $7.25 to $15 an hour. However, moderate Democratic Senators such as Joe Manchin (D–W.Va.) and Jon Tester (D–Mont.)’s opposition led to the Bernie Sanders Minimum Wage Amendment being struck down in the 50-50 liberal Senate.
However, as mainstream Democrats, including the president, continue to praise their signature policy of the rocketed $15 minimum wage, it’s important to consider the ramifications that such a mandate would have on America’s small businesses, entrepreneurs, and economy. Even though the potential change is hailed by progressives such as Senator Bernie Sanders (I–Vt.) as “responding to the needs of working families,” the bill would actually cost countless jobs, shut down small businesses, hurt competition, doom entrepreneurs, and usher in an era of government reliance by the middle class.
Minimum Wage Increase Kills Jobs, Hurts Small Businesses
Perhaps the most devastating — and the most obvious — consequence of raising the minimum wage by such an enormous amount is the reality that when such a change is implemented into a free market economy, the economy cannot adjust, not without the government stepping in. According to the nonpartisan Congressional Budget Office, raising the minimum wage to $15 would cost America 1.4 million jobs by 2025. The Office also projected falls in revenue as devastating as $9 billion and skyrocketing prices of goods and services over a wide array of industries.
Furthermore, the devastating effects of raising the minimum wage on small businesses seem to be unseen by Democrats who are endorsing a policy supposedly designed to help the middle class when it does the opposite. Raising the minimum wage by merely $1 would cost small business owners tens of thousands of dollars in payroll, making it cruelly difficult to produce a profit. If that is the result of raising the minimum wage by $1 without adequate planning and execution, the consequences of raising it by $7.75 amid an economic crisis would be catastrophic.
Moreover, the jobs that would be lost due to increasing the minimum wage aren’t jobs in large corporations — they’re with small businesses. When small businesses are unable to afford to pay their employees, said employees are let go. A recent study found that 14% of small business owners say that they would be obligated to let go of employees if the minimum wage increases, and 28% say that an increased minimum wage would result in not being able to hire additional employees, hence stopping business from further growth.
Due to Covid-19, Raising Minimum Wage to $15 Hurts People it’s Meant to Help
The Covid-19 pandemic turned countless industries upside down, particularly those relating to transportation, hospitality, and education. If the Sanders amendment were implemented, the $15 minimum wage would exacerbate the chaos occurring in industries struggling to cope with the pandemic’s challenges, resulting in even more job losses for middle-class employees of businesses in such industries.
When businesses struggle to stay open amidst an inevitable global crisis, it’s simply foolish to require them to spend more money.
Finally, by raising the minimum wage, the government essentially diminishes the competition amongst businesses regarding employee benefits. In an economy structured like that of the U.S., the inter-business competition allows businesses to optimize their products and services, hence improving customers’ lives and optimizing their work benefits, hence improving employees’ lives as well.
Competitive advantages of businesses allow for job hunters to select the opportunity that rewards them the most. When the minimum wage is increased to $15, this competition is lessened in power. Employers cannot afford to pay their employees that much on such short notice, so they resort to the bare minimum to keep their businesses going.
Increasing the minimum wage is not the issue; almost every Washington lawmaker believes in raising it to some degree. After all, circumstances change, inflation occurs, and productivity increases. However, amid a pandemic, throwing the government into the crisis and hoping it would relieve the middle class is far from a solution. If the minimum wage is increased, it must be done with extreme caution and consideration of the circumstances and potential ramifications. While America endures a once-in-a-century crisis, impulsively pursuing a liberal agenda proven to harm hardworking and honest middle-class citizens is a preposterous and reckless move.