Raising the federal minimum wage will boost consumer spending, improve the financial health of businesses, and expand the economy. A slight increase would raise output, lower absenteeism and turnover, and increase employee satisfaction. However, this would stimulate the economy by increasing consumer demand.
What is minimum wage?
According to the law or the labor contract, the minimum wage is the lowest income that an employer may give to its nonexempt workers.
Benefits of raising the minimum wage
Raising the minimum wage boosts consumer spending, which boosts the economy without adding to the deficits in state and federal budgets. Raising the minimum wage helps strengthen the economy without increasing taxpayer costs. Beyond the increase in labor costs, there are many other benefits for businesses by increasing the minimum wage.
Employee retention
Higher wages could help employers retain their workforce. Reducing employee turnover could be a boon to a business’s bottom line.
Increased work efficiency
Increased work efficiency is a direct result of paying employees a living wage. Raising pay could lead to better performance, higher customer satisfaction, increased morale, and lower error and accident rates.
Reduce absenteeism
Higher compensation encourages employees to come to work more frequently, which boosts productivity.
Boosts economy
Raising the minimum wage has no observable impact on employment, including employment in high-impact industries like restaurants and retail.
Increase in pay scale
Raising the minimum wage would boost pay scales in these types of jobs, where millions of working men and women now spend their careers.
Cons of a minimum wage change
Increased product price
An increase in the minimum wage affects the cost of operating your business. Customers end up paying a high price on everything. As a result, the cost of living increases while the minimum wage does.
Freeze new hires
Businesses may freeze new hires, limiting opportunities for recent college graduates and others entering (or re-entering) the job market.
Increase labor cost
Employers feel pressure to give raises to employees already making above minimum wage, adding additional labor costs. Certain industries may have a more difficult time accommodating the federal minimum wage increase.
As we approach a post-pandemic economic recovery, certain economic-related developments have to be looked upon. Distribution of more funds will have a large impact on consumer purchasing. An increase in minimum wage provides a long-overdue raise to workers. This can be timely and recover the current economic situation.