The minimum wage debate has been a hot topic for a few years now. Proponents of raising the minimum wage believe that it will help the average worker gain purchasing power, while opponents of an increase believe it will lead to unemployment. The minimum wage debate affects the college student as much as, if not more than, anyone else. So, here are three big reasons why college student should support a rise in the minimum wage.
1. A potential raise in the minimum wage would raise all wages.
By gradually raising the minimum wage over time, all other wages would gradually increase. Currently, 43% of US workers make $15 or less per hour. The economic opportunities to make more money are gradually disappearing, but by raising the minimum wage to $15 an hour, the labor market would be shifted to favor the employee rather than the employer. Because people are making a minimum of $15 per hour, people currently making that in skilled positions have the ability to negotiate their wages and have a wage increase. In an economy where the rich are constantly getting richer while the middle class and lower-income Americans are struggling to get by, an increase in wages would benefit the majority of Americans. This increase in entry-level wages would also be helpful to college graduates entering the workforce as they would be able to afford to live on just an entry-level job salary while also paying off student loans.
2. An increase in the minimum wage would boost our nation's GDP.
Consumer spending makes up 70% of U.S. economic activity. Therefore, when consumer spending increases, the Gross Domestic Product, or GDP, increases. Increasing the minimum wage would inject up to $450 billion into the economy. According to Keynesian economic theory, when you have more money, you spend more money. This is because a lower percentage of your net income goes toward bills and fixed expenses. Logically, it makes sense that injecting this money into the economy would increase the nation's GDP. For college students, this means graduating into a vibrant economy rife with opportunity.
3. An increase in the minimum wage will save the taxpayer billions.
According to a study done by the University of California at Berkeley, the low minimum wage costs the taxpayer $153 billion in government subsidies such as food stamps and Medicaid. A 2013 study by the National Employment Law Center shows that the ten biggest fast food companies cost the taxpayer $3.8 billion. With the $200 billion revenue that the fast food industry makes, it would be very easy for the fast food industry to absorb the costs of a minimum wage increase. This will save the college graduate money through taxes leveraged on them to propel the fast food and other industries currently being subsidized to pay poverty wages.
Many opponents of a minimum wage increase fear rising unemployment and rising prices. Those two fears, however, are simply unfounded. A study by the National Employment Law Center shows that increases in the minimum wage over time actually do not correlate with job losses; rather, employment has been boosted in sectors such as hospitality and retail with minimum wage increases. Another study shows that even a year later, Seattle's historic minimum wage increase did not increase prices. When looking at the actuality of minimum wage increases, the rewards tend to outweigh the risks.
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