Any time there is a proposal to increase the minimum wage, there is sure to be controversy. While some people support it as being fair and beneficial for low-income workers, others argue that raising the minimum wage will lead to reduced employment and have negative effects on businesses and the economy. So which side is correct? Let’s take a look at what an increase in minimum wage means for the economy.
The Pros of Increasing the Minimum Wage for Employees
There are good reasons for increasing the wage for employees and some of which are:
- It Boosts Employee Morale – When employees feel like they are being underpaid for the work they do, they tend to feel frustrated and unappreciated. In the long run, this can lead to higher turnover rates for businesses.
- It Reduces Turnover – High turnover rates usually come with higher costs for businesses, including the need to hire and train new staff. Therefore, it is beneficial for businesses to have employees who are happy with their pay and less likely to leave their job.
The Pros of Raising the Minimum Wage for Businesses
If you think that only employees benefit from increased minimum wage, you’re wrong. Businesses can take advantage of it too.
- It Reduces Operating Costs – Businesses are required to pay employees based on the minimum wage set by the government.
Therefore, when minimum wages increase, businesses save money because they are paying their workers less.
- It Saves Money on Taxes – When companies have more employees earning higher wages, they are required to pay more in taxes. Therefore, raising the minimum wage can save companies money on taxes.