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  • Writer's pictureJennifer Light

The Harms of Minimum Wage

The fight for minimum wage increases has been raging on for years in the political world. However, there are unseen and undiscussed harms to even having a minimum wage standard at all. Not only does it have the ability to impact small businesses to hire, it drastically increases unemployment as well as hurts union labor force and automation.

Small Businesses

Hikes in minimum wage harm businesses and make products and services more expensive - not only for the consumer but for the producers as well. The more a company has to pay to employ crucial workers, the higher it has to raise prices in products in order to make a profit. When economists were asked what effect a $15.00 per hour minimum wage will have on small businesses with fewer than 50 employees, nearly 7 out of 10 economists (67%) believe it would make it harder for them to stay in business.

Job Automation

Let’s face it. At some point in your lifetime, a robot is going to take your job. Morris M writes, “we don’t care if you’re a till jockey, a cab driver, a CEO, or an internet writer (aw, dang it); one day, AI is going to get so advanced it’ll be child’s play for a machine to do whatever the heck it is you sweat your cajones off doing. And it’s going to happen sooner than you think.” Many jobs have been automated already, and many more are on the path to become automated as well. But, the first jobs that may go? Minimum wage jobs.

At some point in the near future, it will make a lot more financial sense for a company to use an automated system instead of a human, just for some jobs. For example, a job such as cleaning may remain hard for a robot to do effectively. But plenty of others will be affected. Although this robot revolution is probably inevitable, scrapping the minimum wage could delay it in the medium-term. If there’s no set amount a workplace has to pay a worker, it will take longer to decide at what point the machine-employees become cost-effective. This means the unskilled can remain in jobs for longer, and be able to save and work towards getting a job that would take decades to be automated, increasing their quality of life.

EU’s Minimum Wage Policy

One similar factor between the European Union countries of Italy, Denmark, Finland, Cyprus, and Austria is that they all lack minimum wage laws. Another factor that connects them? They all, on average, have lower levels of unemployment than the rest of the European Union.

This has been the case for as long as people have been collecting data on EU unemployment, but it became especially pronounced after the 2008 financial crisis. By 2012, the countries without minimum wage had unemployment levels that were on average up to a third lower than those with.

Minimum wage laws represent a cost a business has to absorb. When such laws are strong, managers are less willing to hire. However, if you take away minimum wage, employers are much more likely to take on someone with little to no experience, or someone who lacks a formal education. This can take an axe to unemployment figures, getting the economically unproductive into the workforce.

If minimum wages reduce employment of low-skill workers, then minimum wages are not a “free lunch” with which to help poor and low-income families, but instead pose a trade-off of benefits for some versus costs for others. Research findings are not unanimous, but especially for the US, evidence suggests that minimum wages reduce the jobs available to low-skill workers.


Unions have lost purpose due to the minimum wage laws. Unable to negotiate wages and benefits, and companies would continue to pay the low minimum wage. If we allowed workers to negotiate wages, unions would be able to connect workers together to negotiate wages, benefits, and other stuff to assist laborers. Unions would be able to come back to prominence. Currently, with the minimum wage keeping unions in the shadows, America will continue to see low union power. “A non-union America will be of course a low-wage America. Most people will work harder for less. Employer contributions to pensions and health care will be a thing of the past. No longer even remotely threatened with organized resistance, employers will make “on-call” contingent work the norm. Let unions return to negotiate higher wages and better benefits for the workers.

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