At first glance, a $15 minimum wage is alluring, especially if you’re the one making the cash. So, why do we hear so many arguments against raising the hourly wage? Are these people blatantly opposing the working class? Probably not; as with many political debates these days, each side’s conversations have many layers. Before we dive into the backgrounds of each extreme, let’s open up to the possibility of a compromise: Giant companies could pay the $15 minimum wage while small mom-and-pop businesses pay a lower amount.
Benefits of raising the minimum wage
Plenty of evidence supports raising the minimum wage. Pick one: inflation, cost of living, interest rates or various other challenges that the average American faces. The National Low Income Housing Commission reported that “there is not a single U.S. state in which a minimum wage worker can afford to rent a two-bedroom home.” Most young people now dump more than half of their salary into rent, leaving little money for anything else.
The Journalists Resource reported that a $15 minimum wage could cause the number of people in poverty to fall by 900,000 in a decade. Also, paying living wages to employees helps them be more productive and avoids company turnover. But not every effect of this wage hike would be positive.
Further hurting small businesses
Your local mom-and-pop businesses have had a rough year. Adding a federal $15 minimum wage would be the last straw. How are they supposed to pay more for employees when – in pre-pandemic times – 20% of small businesses fail within the first year? These entrepreneurs would have to pay more for labor, causing the employees to pay more taxes, ensuring that the government received more money. What about the employer that paid more money in the first place?
According to Journalists Resource, this wage increase could lead to 1.4 million fewer jobs because businesses would have to cut down on labor costs. As reported by the Journalists Resource, two economists discovered that “state and federal minimum wage increases from 2003-2007 didn’t affect state poverty rates and that the working poor were hit hardest by job losses.” Maybe a federally-mandated minimum wage wouldn’t be the best solution.
The debate needs to be reframed
How can we adequately compensate our working class for their time and effort without choking out small business owners? Is there any room for compromise? Consider this. We always hear about how well our most prominent companies are doing. Amazon, Walmart, Target and more giants thrived, even during the pandemic. Washington Post analysis found that “45 of the 50 most valuable publicly traded U.S. companies turned a profit” in the crisis. They were able to pivot, provide essential services to their customers and, therefore, thrive.
What if we didn’t start with a federal mandate for a standard $15 wage facelift? If we did a trial run with giant companies, they’d be helping out middle and lower-class Americans, and small businesses would get a chance to rebuild. And, ultimately, the entire nation could monitor the positive effects of a wage boost. Can we call it a win-win-win?