High wages do not equal high living standards

Every day, hundreds of thousands of Americans endure the stress of living paycheck to paycheck. Currently, according to bls.gov, 2.4 percent of the American population earns federal minimum wage, and 42.2 percent of Americans make under fifteen dollars an hour. These can be challenging circumstances that make life difficult for countless Americans. 

Unfortunately, there must be people who earn low wages in a capitalist society, or else the whole system will fall apart. 

Unfortunately, there must be people who earn low wages in a capitalist society, or else the whole system will fall apart. 

Ethically speaking, raising the minimum is a great idea. People should not have to have to work long and hard hours just to get by in life. However, the repercussions of raising the federal minimum wage vastly outweigh the potential benefits. 

By raising the minimum wage, businesses’ profits will drop unless companies make changes in their business structure to compensate for these losses. American workers will lose their jobs because small businesses with low-profit margins will not stay open if they have to pay all of their employees more money. The larger companies with thousands of workers will most likely move their business to another country where labor is less expensive. 

Companies such as Apple, Nike, and Toyota all manufacture their products in South East Asia because paying the employees in these countries is significantly cheaper than in the U.S. Even though countries like China and Japan implemented taxes on American goods made in their country, it is still less expensive for businesses to pay these taxes than to move their factories back to the U.S. and pay each worker a higher wage. To be fair, not many people would want a manual-labor job for these Fortune five-hundred companies. Still, if we raise the minimum wage, there will be many mid-sized companies with reasonable working conditions moving their factories to another country to avoid paying workers higher wages, thereby putting American workers out of their jobs.

If companies decide they do not want to fire their employees or move locations, they must raise their products’ prices to compensate for the fact that they have to pay their workers higher wages. If the prices rise on American goods, we will run the risk of inflation, which would severely hurt the U.S. economy and negate the effects of raising the minimum wage.

Lastly, if there is an increase in the minimum wage, some companies will simply not be able to afford to stay in business, making the market less competitive and further driving up inflation.

Critics will argue that the fourteen dollar minimum wage in California is ideal, and should be implemented in other American states. While California’s fourteen-dollar minimum wage may seem great, it is important to look deeper into how California is actually performing. California is a prime example of what happens when the minimum wage is raised. California has the second-highest unemployment rate and holds 27.7% of the entire U.S homeless population. The increased minimum wage in California in partly why the living conditions in the state are among the worst in the U.S.

At the end of the day, morally wrong or not, businesses exist to make money. Business owners will do anything and everything they can do to be as profitable as possible, even if that means firing employees or finding employees from different countries.

Ember, Sydney, “How a Minimum-Wage Increase Is Being Felt in a Low-Wage City

”, New York times. March 8, 2021

BLS Reports, “Characteristics of Minimum Wage” US Bureau of Labor Services. March 8, 2021

Phelan, John, “Who Earns the Minimum Wage” Center of the American Experiment. March 8,, 2021