The Side Effects of Raising the Minimum Wage

The whole idea behind raising the minimum wage is to give minimum wage workers enough money to live off of. The proponents of it say that raising the minimum wage is the moral thing to do to stop so much poverty.

Unfortunately, the minimum wage has some nasty side effects. I will let you be the judge of the minimum wage after we explain them.


before we get into this, we have to understand the employer-employee relationship. employers ask employees to do work for them for a price. al work or labor has a price, an employer might pay an employee who takes out the trash less than an employee that cooks in the kitchen. why? because anyone can take out the trash, but few can cook well. as you can see, the price of labor is higher the more valuable the work is.

The minimum wage makes it illegal to pay less for less valuable work. One might be willing to work for $10 an hour but cannot because it is illegal to do so if the minimum wage is set above $10.

Second, we need to understand how businesses stay successful. Businesses are successful when they can please the most amount of people with their goods or services and gain profit for it. Every business HAS TO receive profit in order to continue being successful. So when you raise the minimum wage, employers absolutely have to do something to compensate for it in order to afford to pay their employees and still stay successful.


This compensation comes in five forms.


  1. Employers raise prices of their goods and services, resulting in more expensive items  not only for the average consumer, but the employees themselves have to pay A LOT more money to buy food and such because of this. (example here)


  1. Workers are forced to work fewer hours to compensate for the additional money they are paid per hour. This harms employees a ton because the employer cannot afford to pay all of the employees for how many hours worked.(example here)  although the employees would rather work longer and recieve receive less per hour but more money overall, they aren’t allowed to.


  1. Workers who cannot be afforded will be fired. you might be willing to work for $10 instead of $15 but you will be left without a job because your employer can’t afford to keep you and everyone else on the team if you are recieving $15 an hour.(example here) So you end up unable to afford anything because you have no job.


  1. Standards for hiring people rise, and employers are forced to hire less people. Business can’t afford to hire as many new people because it is more expensive to do so. Not only that, but if you are to be hired, you must be extremely productive and experienced. Because of this, those who are trying to get a job but have no experience, such as a high school student graduating and starting a job to pay for college, will find it extremely difficult to find a job because they don’t have previous experience. (example here)


  1. Employers have to make workers more productive to balance out their work. So when coupled with Number 2, you have a worker who has to work less hours but has to work harder to compensate for the hours he/she cannot work. Also, the worker has to compensate for the lost profits from being paid more by working harder.

“Employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale. “

– The Economic Policy Institute


So by the end of it you have fewer people working. those who are working are overworked and  less hours. Those who are out of a job also find it much harder to actually get a job. And finally, everyone including the employees themselves, have to pay more for goods and services, more for food, gas, air conditioning, and housing.


So what do you think of raising the minimum wage? You still think that it is a good idea after seeing the side effects? Answer in the comments down below!