Government Intervention to Help the Working Poor: There is a Better Option than Raising Minimum Wage

One of the biggest negative effects of raising the minimum wage is that it would severely hurt small businesses. If the minimum wage were to be raised it would force the owners to pay their employees more money that they might not have. In order to pay the employees the newly raised minimum wage they are gonna have to raise the prices which will lead to the loss of consumers, and might eventually lead to the store going out of business. According to a Gallup poll done in 2013, 60 percent of small-business owners said that raising minimum wage will “hurt small business owners. James Richardson, MBA, Vice President of the fast food chain White Castle, said that the company would be forced to close

Several examples of data and statistics from studies elucidate the harmful effects on small businesses and in addition the compelling of companies to close as a result of the increase of minimum wage. According to a Gallup poll that took place in 2013, 60% of small business owners agreed that an increase in minimum wage would be harmful to their small businesses (Should the Federal). Small businesses do not have the money supply that chain corporations do. Naturally, if they had to pay their employees more, it would be harmful to them. Several Walmart stores have closed and Walmart stores that were yet to open have closed as a result of an increase in the minimum wage (Should the Federal). An increase in the minimum wage must even have harmful effects on larger businesses. They obviously employ several more people than a small business, so they have to pay each worker more resulting in a net loss of a lot of money from the chain. Additionally, in several work places, if the minimum wage were increased, the wages of those who hold higher positions would have to be increased. For example, if the amount of money that the minimum wage dishwasher or table busser in a restaurant increased, then the chef and manager would need to be paid accordingly. If the minimum wage were to increase, it would be detrimental to both small and large businesses.

The main concepts of the article are describing the corporate welfare system and how it is responsible for growing economic imbalances between the poor and rich populations. The article elaborated on how we cannot ignore the issue anymore because of the substantial loss that we are facing by letting the gap grow (Huff, 1993). The article also goes into the IRS and how there are tax exemptions and deductions that people qualify for and what is allowed.

And while these effects are more on the scale of large corporations, small businesses may yet also feel the effects of the minimum wage. With even fewer resources to rely on, a small business would have a harder time progressing and growing; a small business has only a small selection of workers who may be indispensable, so downsizing may be out of the picture, forcing them to cut back expenses, thus stunting their growth and leaving room for large corporations to take over the local industries. This, of course, presents another problem in today’s society concerning capitalism and a free market economy – when a small business grows weak financially; larger corporations have an opportunity to sweep in and seize hold of the local market for specific goods and services, drawing money out of that town and into the pockets of greedy companies. For example, a local burger joint or mom & pop store could be crippled by a turn of the economy, causing them to raise prices and cut back on expenses. However, the local McDonalds or Walmart would only be affected by a relatively smaller margin, spearheading these corporations into the

The main reason raising the minimum wage radically would kill the economy is the pressure it would place on small businesses. According to TheWashingtonPost.com article, Small Businesses are the backbone of the economy. They also cited that many studies from the U.S. Small Business Administration show small firms employ just

One of the United States most effective tools is The Earned Income Tax Credit which encourages work and improvement of family poverty (Center for American Progress, 2016). In the year of 2014 Earned Income Tax Credit helped more than 6.2 million Americans in the fight against poverty (Center for American Progress, 2016). A disadvantage to the Earned Income Tax Credit, is experienced in workers whose income is relatively low without qualifying children (Center for American Progress, 2016). In these

Beside the increase in cost to businesses and customers, other people can potentially be hurt by this policy. By increasing the wage, small businesses will suffer a higher cost that can lead to cutting jobs, stalling new hire or even shutting down. On the other hand, the economic plight of these minimum wage workers should also be considered. Therefore, the $15 plan would produce unpredictable consequences, while not doing anything would doom minimum wage workers to live in in poverty and to consume public resources.

Furthermore, smaller companies will go out of business resulting in slower grow. Now this is why we shouldn't raise minimum wage; due to those that can't afford to pay a higher paycheck. This next piece of knowledge was chosen because it informs us on how in the process of raising minimum wage it would hurt other small companies. "… increases to the minimum wage will place a burden on employers, especially small companies, resulting in slower growth and decreased levels of employment," stated from "Pros and Cons of Raising Minimum

In the article “Minimum Wage Laws are Destroying Jobs - Just as Predicted” by Larry Elder, Elder discusses the negative impact raising minimum wage has on small businesses. Through the use of testimonies from companies affected by the raise in minimum wage and statistics from the wage increase in California, Elder appeals to both the emotions and logic of the reader. He references a small restaurant owner who knew he could not support this increase in wages, but was told by Los Angeles Mayor Eric Garcetti that it was not going to be an issue for him. By showing the negative outcomes of this decision such as unemployment, higher prices, and businesses closures, Elder appeals the reader's emotions. He wants us to understand the hardships and

Those who oppose the Fair Minimum Wage Act argue that higher wages will cause higher unemployment. These supporters are generally Republicans and employers of small businesses. They believe businesses will not be able to afford to pay higher wages and therefore must lay off employees. They also believe that increasing the minimum wage can jeopardize small businesses because smaller businesses operate at a smaller profit margin than large companies. Therefore, some smaller businesses would need to lay off employees to reduce their overhead costs and some may be forced out of business completely. Furthermore, they believe increasing the minimum wage will make inflation go up. They believe businesses have no choice but to pass the increase in cost to the customers by increasing prices of their products and services.

In a previously mentioned 2007 article from James Sherk, American small businesses would have to hire fewer workers with an increased minimum wage. What exactly does this mean? This means that the business' ability to expand by hiring more workers at minimum wage will be greatly reduced. According to an article from the Guarding in April 2015 from Ucilia Wang, small businesses employ nearly half of the private sector workforce in the United States. Jane Mcquin owner of a small business in New York said about an increased minimum wage "At this point as a startup it would put me out of business." That’s not the only small business owner to fear an increased minimum wage, Melissa Otto, owner of a dog care business in Santa Monica California said "We employ up to six people at any given time and increasing the minimum wage would ruin us. We provide a service – dog walking – and are already at the max of what clients will pay. There is no room for an increase." The same article also found out that the increased minimum wage forced some small businesses to increases prices by as much as 20% of what they were with the previous minimum wage. Theses increased prices can lead to customers not wanting to return to restaurants or businesses because of the high prices for the same service and the same product as before, only difference is the

Increasing the FMW would be devastating to many small businesses. According to the SBA size standards ninety-nine percent of companies in the United States qualify as small. Therefore, they are just as crucial to the american economy and workforce as the large corporations. Raising minimum wage would hit these small businesses the hardest, because many times they do not have a surplus funds to fall back on. In “Seattle’s Coming $15 Minimum Wage” Alexander(2015) reveals the harm that Seattle's $15 minimum wage hike has done to small businesses. The author supports their argument by getting testimonies from multiple small business owners all over seattle. One of them Joe Salvatore, general manager at a The Recycling Depot, states a common misconception

As for small businesses being harmed by an increase in minimum wage, Batra proves that a rise in minimum wage, as long as it is not faster than the rise in prices, will not adversely affect the businesses’ profits. He says that a business’s profit equals the revenue, less wage costs and all other costs. Batra offers an example with a popular fast-food franchise:

Businesses will not just reduce the number of employees they will also seek to maximize their profit by reducing benefits. While most minimum wage jobs do not offer much in the way of benefits, many at least offer some form of incentive. In some cases it may be a free of reduced cost meal, others may offer at least some form of basic health plan or 401(k). The effect of raising the minimum wage is also disproportionate, affecting small businesses more than larger companies. This leads to a greater incentive for a small business to participate in the ""black market" for labor, by paying employees in cash in order to pay them less than

Because of minimum wage and the outcomes of what it 's like to live off of minimum wage, small businesses are sometimes unable to keep employees because of the lack of pay. Some employees have a lot more bills and their own living costs that they are responsible for so when the minimal wage is so low, those employees eventually cannot work there anymore because they are needing more money than just what minimal wage is at. Another downfall to small businesses and just having minimum wage is that a lot of the businesses do