While few would deny that raising the minimum wage is a well-intentioned strategy, it is incredibly inefficient and runs the risk of furthering the very problems it seeks to quell.
Raising the minimum wage will only be an additional hurdle for the unemployed if they choose to seek employment. An estimate cited in Forbes suggests that less than 15 percent of increased wages wind up in the hands of people below the poverty line. The bottom line is that less than five percent of the workforce earns minimum wage and the majority of these workers are from above median income families.
A quick look at the law of demand shows why a heightened minimum wage could lead to increased unemployment. As technology and self-checkout services continue to decrease the size of the workforce, an unemployment-ridden North Carolina cannot increase labor costs.
Politicians are silly to think that businesses will foot the bill on the increase in labor costs — they will simply increase prices across the board and only further stagnate the economy.
If lawmakers truly wish to reduce poverty and increase employment they should look to allocate additional resources to the Earned Income Tax Credit — the nation’s largest antipoverty transfer program.
There is no problem with raising minimum wage to keep pace with inflation, but while consumer prices are up moderately since the wage was last raised, President Barack Obama’s proposal would implement a 39 percent jump.
Legislators in North Carolina should look to support those affected by poverty, but raising the minimum wage four times that of the inflation rate simply is not the answer.
Read the opposing viewpoint here.
