Increasing the Minimum Wage Will Not Equal Disaster

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Republicans want us to believe that higher wages will lead to higher prices and lower employment. Studies have proven, however, that this is a myth based on faulty logic and misinformation.

Upon doing my own research on the matter, I not only found that there is strong evidence debunking this minimum wage myth, but that this information is freely available to anyone that cares to look. There’s no reason why you should simply accept what you’re told- you can seek out the truth on your own. That’s how you must empower yourself.

So here’s what I learned. One website,, gave a “for instance” in which Walmart doubled its workers’ salaries. The author says that, based on Walmart’s profits, this would not only be possible, but need not have any impact on the prices of its products. Keep in mind that Walmart’s gross profits, as of Jan. 31 for the past few months alone, was $32,025,000,000 (that’s BILLIONS), according to Also note that Walmart’s CEO, Mike Duke, gets paid 1,034 times more than the median Walmart worker ( and That equals $23.15 million last year alone. Oh, and one more thing- the average Walmart worker’s salary is below the poverty line. That means, in terms of federal standards, these workers are considered to be living in poverty, and many receive food stamps.


Wal-Mart could cut $4 billion out of Selling, General and Administrative and Operating Income. Wal-Mart could eliminate its 20 jets, cut the CEO salary by a factor of 20, cut thousands of executive salaries in the same way, cut back on the $1.3 billion/year in dividends and so on. Prices would not have to go up at all, and Wal-Mart could double the pay of one million associates. OR Wal-Mart could increase its prices by 7% and double their pay in that way.

The point the author is making is that there are several ways to double the salaries of Walmart’s employees without raising prices, which is one of the main concerns Republicans love to rant about. He also goes on to say that the numbers can be played around with a bit so as not to lower CEO and other executive salaries as much and still increase salaries of the average worker. Prices need only go up by as little as 3.5 percent, which would translate to the price of a typical can of  soup going from $1.49 per can to $1.54 per can. Not that earth-shattering. I think people could handle that.

Now, what about the loss of jobs Republicans are threatening will happen? McDonald’s has also claimed that they’d have to cut workers if they were to raise wages. But is this accurate? According to many studies, the answer is no (

For instance, in 2009 researchers conducted a review of 64 minimum-wage studies published between 1972 and 2007 measuring the impact of minimum wages on teenage employment and when they graphed “every employment estimate contained in these studies (over 1,000 in total), weighting each estimate by its statistical precision, they found that the most precise estimates were heavily clustered at or near zero employment effects.”

Many studies, in fact, show positive results for a raise in minimum wage, including (

1. Improving efficiency. An increase in the minimum wage may lead employers to encourage employees to work harder, since they’re now being paid more. Such an adjustment may be preferable to “cutting employment (or hours) because employer actions that reduce employment can ‘hurt morale and engender retaliation.’”

2. Increasing demand. Raising the minimum wage may increase demand for goods and services and bolster consumer spending, offsetting the increase to employer costs. One study estimates “that an increase in the minimum-wage from its current level of $7.25 per hour to $9.80 per hour by July 2014 would increase the earnings low-wage workers by about $40 billion over the period” and create some 100,000 jobs.

3. Prices. A comprehensive review of more than 30 academic papers on the price  effects of the minimum wage found that “most studies reviewed above found that a 10% US minimum wage increase raises food prices by no more than 4% and overall prices by no more than 0.4%…without destroying too many jobs or causing too much inflation.”

Is a $15/hour wage that many fast food workers are demanding a bit steep? Perhaps. A few of these studies have said that $15 may be more than businesses can bear before declines in profits take place. But I say we should support these workers, anyway. I suspect that these workers know McDonald’s and other businesses may never be willing to raise wages that much, and that both parties could settle for a more modest increase, such as $12 or $13. But for this to happen, the pressure on businesses from workers and the public must remain strong and unrelenting. Any increase will be beneficial, and further increases can come in time.

One other important point is that an article on reports that 75 leading economists support the Democratic proposal to raise the federal minimum wage to $10.10. The group includes seven Nobel laureates, among them Joseph Stiglitz and Peter Diamond, and several former Obama and Clinton administration economists. They’ve lent their support to legislation known as the Fair Minimum Wage Act. It’s probably safe to assume that these people know what they’re talking about, at least way more than Republicans do!


4 thoughts on “Increasing the Minimum Wage Will Not Equal Disaster

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