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The Journal Gazette

Tuesday, May 16, 2017 1:00 am

Minimum wage hike is bad for business

Jacob Heinemeyer

Jacob Heinemeyer of Fort Wayne is a junior at Homestead HIgh School.

Millions of Americans are living on minimum wage and believe the answer to their financial problems is an increase.

Proponents of the increase believe this would allow such people to live a life out of poverty. However, this would not be the case.

Many small businesses would have to close without the ability to pay their workers. Some companies would have to lay off workers, reducing the number of jobs. Many businesses would have to reduce their hiring numbers. As a young-adult worker, it would be difficult to find a job because only experienced individuals would be hired. 

Advocates believe an increase to the minimum wage will help Americans get out of poverty and inject money into our economy while creating more jobs over time.

If a raise were to happen, businesses would have to increase their prices to continue to pay their workers.

However, this may not work for some businesses, and these businesses will have to lay off workers and close stores in order not to go bankrupt.

This would eliminate the claimed positive effects of the increase.

Another issue would be the reduction of young adults in the workforce. More than half of minimum-wage workers are teens or young adults; many of these people have little experience as a result of lack of opportunity.

If the minimum wage were increased, businesses would be unable to hire and pay these inexperienced workers,; they would eventually be losing money. This was shown in 2009 when the minimum wage was increased and young-adult employment dropped almost 8 percent in a few months.

An increase would result in numerous additional problems. Supporters believe that because employees are making more money, this will decrease poverty.

However, this would require a higher cost of production, thus increasing the price of goods. Also, many employers would look into machines that could more cheaply do the jobs of employees.

With the replacement of workers with robots, thousands of jobs would be lost to these machines. Companies could also look to have labor done in other countries. 

An increase to the minimum wage will result in a loss of jobs – whether it be to workers in other countries or machines that can do the work cheaper – as well as an increase to the U.S. poverty rate.

While making more money may sound good in general, a deeper understanding reveals how it will negatively affect millions of Americans and create a roadblock for teenagers to get into the workforce.