First – Here is a good article regarding the impacts of raising the minimum wage

REPuBlican Candidates agree – don’t raise the minimum wage

Here is a transcript of the Nov 10, 2015 GOP debate from Amy Goodman

NEIL CAVUTO: Mr. Trump, as the leading presidential candidate on this stage and one whose tax plan exempts couples making up to $50,000 a year from paying any federal income taxes at all, are you sympathetic to the protesters’ cause, since a $15 wage works out to about $31,000 a year?

DONALD TRUMP: I can’t be, Neil. And the reason I can’t be is that we are a country that is being beaten on every front economically, militarily. There is nothing that we do now to win. We don’t win anymore. Our taxes are too high. I’ve come up with a tax plan that many, many people like very much. It’s going to be a tremendous plan. I think it will make our country and our economy very dynamic. But taxes too high, wages too high, we’re not going to be able to compete against the world. I hate to say it, but we have to leave it the way it is. People have to go out, they have to work really hard, and they have to get into that upper stratum. But we cannot do this if we are going to compete with the rest of the world. We just can’t do it.

NEIL CAVUTO: So do not raise the minimum wage?

DONALD TRUMP: I would not raise the minimum.

NEIL CAVUTO: Dr. Carson?

DR. BEN CARSON: As far as the minimum wage is concerned, people need to be educated on the minimum wage. Every time we raise the minimum wage, the number of jobless people increases. It’s particularly a problem in the black community. Only 19.8 percent of black teenagers have a job, who are looking for one. You know, and that’s because of those high wages. If you lower those wages, that comes down.

NEIL CAVUTO: Senator Rubio.

SEN. MARCO RUBIO: If I thought that raising the minimum wage was the best way to help people increase their pay, I would be all for it. But it isn’t. In the 21st century, it’s a disaster. If you raise the minimum wage, you’re going to make people more expensive than a machine. And that means all this automation that’s replacing jobs and people right now is only going to be accelerated.

What they Claim will happen

The clear assertion here is that raising the minimum wage will not be a good for either the country or the job seekers. But does this assertion have any real evidence or are they just making things up to justify the not raising the minimum wage?

  • We can’t do anything anti-business
  • Increasing the minimum wage will eliminate jobs
  • People will be replaced by machines

None of these claims hold water

The Actual Impact of Minimum Wage increases

The US department of Labor has a nice summary of the current research

Myth: The federal minimum wage is higher today than it was when President Reagan took office.

Not true: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s. That’s why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”

What seems to happen following a raise in the minimum wage is the following:

  • Minimum wage earners see a dramatic improvement in their standard of living. See this summary from the Washington Post which concludes that raising the wage to $10/hr would pull 4.6 Million people out of poverty. This would also reduce the need to subsidize minimum wage workers with food stamps and other programs.
  • Unemployment is unaffected because these jobs really cant migrate away. Minimum wage jobs are overwhelmingly local workers whose jobs cannot be moved overseas.
  • The economy is unaffected because the actual small loss of jobs is balanced by the greater spending from minimum wage workers
  • Consumer prices go up slightly because the added employment costs must be passed on.

Consumer price increases

This sounds scary – How much will prices increase? Well one way to estimate it is to assume that all of the cost is passed in price increases. This would increase the cost of burgers, cleaning and other minimum wage industries, but little else.

An article in the Restaurant Finance Monitor concludes that most fast food restaurants spend about 20% on minimum wage labor. So increasing the total labor cost by 2x would increase the cost of a $4 burger to $4.80 and that this would have a significant negative impact on sales.

Consider what happened to Dan Fransisco Restaurant workers as documented in this Seattle Times article

Australia already has a $14.50 minimum wage and guess what – McDonalds is doing just fine.

This is exactly the point, individual companies will not raise wages individually, but a minimum wage law will require ALL restaurants to increase wages so that no individual restaurants are penalized.

Summary

Forbes  states that minimum wage workers account for 1.25% of the USA GNP and then comment:

Even though it’s true that raising the minimum wage would result in more money for those who receive it, because it is so low (hence the word minimum), it would have very little effect on the U.S. economy.

Thats it in a nutshell. A huge impact on the lives of minimum wage workers, minimal impact on the economy. The only reason not do it is meanness.