In light of the recent passage of the $1.9 trillion stimulus bill in the House, an increase in the minimum wage is all the buzz. Along with details of the newest stimulus package for millions of Americans, the American Rescue Plan Act of 2021 would also raise the federal minimum wage if passed unchanged in the Senate. Proponents of the national increase from $7.25 to $15 an hour claim that it is the only way to lift Americans out of poverty during the global pandemic caused by the coronavirus. However, what members like Bernie Sanders (I-VT) and Ocasio Cortez (D-NY) do not realize is that the minimum wage is not a saving grace; it would be better likened to bandage on a bullet wound.

While in theory the minimum wage sounds great, (who wouldn’t want a seven-dollar raise?) it’s actually destructive, not only our economy, but to businesses and employees everywhere. According to a study done by the CBO, a federal increase of the minimum wage would have 3 disastrous implications:

  • This policy would cost the US 1.4 million jobs. Many small businesses who have been negatively affected due to national and state lockdowns cannot afford the hundreds of dollars per employee that this increase would cost. These businesses have been drastically hit by the pandemic. Shutdowns, limited capacities, and less revenue have closed thousands of businesses’ doors. In order to pay almost twice the amount per employee, businesses must either let go of half their staff or go in the red. The policy that is meant to raise people out of poverty would put more than a million people in it (ironic, isn’t it?).

  • A rise in minimum wage means inflation. The cost of production will rise which results in higher prices. While some of the workforce may be seeing a higher paycheck, that becomes futile when they must pay the difference in their weekly groceries.

  • This wage increase also will result in less opportunity for those lacking skills and work experience. With the less availability of jobs, competition amongst candidates will rise. High schoolers trying to obtain work experience? Sorry, you need work experience to get your first job (it feels contradictory, because it is). And while Indeed postings have gone up for new job openings, with such a job demand from those who were laid-offs due to COVID policies, the number of applicants will far outweigh the jobs that are available

An honorable mention is the drastic measures businesses will take to sidestep this wage increase. Kiosks, robots, and other tech gadgets have begun to replace human labor and will increase now that some businesses cannot afford to keep workers on.

As the Senate prepares to debate and vote on the American Rescue Plan Act, American business owners will be keeping a watchful eye out for the specific deliberations on an increased federal minimum wage. Just like everything the government does, while we think they mean well, this increase should stay a good idea on paper for the sake of employers and employees across the nation.

Giana is a student at Liberty University studying Government. She has a heart for God, the pro-life movement, and all things freedom. Oh, and dogs, of course.

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