To read Amelia’s opposing viewpoint, click here.
While workers demand higher pay and nationwide petitions are being formed in favor of a minimum wage increase, the debate over wage reform has grown louder than ever before. With the intent behind raising the minimum wage is to ensure that workers earn a livable wage, the economic reality is far more complicated.
Rather than lifting people out of poverty, a higher wage floor could lead to job losses, increased costs for products and fewer hours for younger workers.
According to the US Department of Labor, the federal minimum wage currently stands at $7.25. In Nevada, it sits at $12.00 because of Assembly Bill 456, which began in July 2024. Wages are determined by a multitude of factors, such as the local cost of living and inflation; many states can adjust based on necessity, with employers having to navigate their businesses and who they can afford to hire. As each state operates differently, the nationwide push to raise the minimum wage overlooks how businesses operate and how economic ecosystems vary from state to state. Wage policies should support local realities, not put unequal strains on businesses whose conditions vary depending on location.
One of the most concerning consequences of raising the minimum wage is the potential reduction in employment opportunities, especially for unskilled or new workers. Smaller, local businesses often struggle with operating on smaller profit margins and higher labor costs can quickly begin to exceed what they are able to sustain. When forced to cut expenses, one of the first places they look is in lower-skilled, entry-level jobs. This leaves fewer openings for people who are looking to gain experience or earn part-time income. Job experience is crucial for long-term career success and removing these opportunities creates disadvantages for both students and new workers.
Raising the minimum wage would also increase the cost of goods and services for consumers. A study done by the USDA Economic Research Service found that a 50-cent increase in the minimum wage correlates to an increase in restaurant prices by 0.9%. If businesses were to pay their workers more, the cost would be passed on to customers to make up for that loss. This would ultimately create a cycle where workers technically earn more on paper, but they would be spending extra on groceries, dining at restaurants and everyday household items. Students and families are already facing financial pressures to begin with. If you incorporate the supposedly beneficial wage increase, any advantages would only be diminished by the higher cost of common expenses that would follow.
In particular, many young workers would face unintended consequences from wage hikes. In 2023, it was found that 44 percent of those who work minimum wage jobs are under the age of 25 or less, showing that many young people depend on these jobs for part-time income. Research also found that an increase in minimum wage reduced hours worked per week for people aged 14-21. Even with a higher rate of pay, fewer scheduled hours would mean that workers earn roughly the same amount of money or sometimes less than before the increase.
On top of making little to no additional income, reducing shifts limits opportunities to gain valuable work experience, something that is especially important to many young workers. Teens often rely on these jobs to add to their resumes, and build important skills such as time management and customer service. When met with fewer hours scheduled or even entry-level jobs being eliminated entirely, teens will miss out on important opportunities that will help them succeed in the future.
Although many argue that increasing the minimum wage is the best way to support workers, the purpose of minimum-wage jobs must be considered. These positions were never designed to support entire households; they exist to give people part-time income, and experience and a step towards a higher-paying career. Raising the minimum wage would risk eliminating the entry-level positions that allow young people to enter the workforce.
Instead of forcing businesses to take on higher labor costs, it would be a more effective solution to address the true sources of financial strain. Expanding access to affordable college tuition, increasing grants, affordable healthcare, greater access to necessities and promoting affordable housing are all more meaningful ways to support people who are struggling without negatively impacting minimum wage jobs.
While raising the minimum wage seems like a good idea in theory, the economic consequences that follow, such as the decrease in entry-level job opportunities, increased costs for consumers and fewer hours for young workers heavily outweigh the benefits. Instead of pushing to increase the minimum wage, people should truly be looking at how education and the cost of living can be assisted without adding extra pressure on businesses or limiting opportunities for workers.
