Why The Federal Minimum Wage Needs Abolishing, Not Raising

According to a Data for Progress Poll in 2024, more than 80% of Democrats, Independents, and Republicans believe that the current federal minimum wage is not enough to sustain a decent quality of life. The polling data also revealed that raising the federal minimum wage from $7.25 to $9 and/or $12 are about equally popular, with both receiving support from more than 80% of voters. Considering that the last raising of the federal minimum wage was in 2009 and that, since then, consumer prices have risen by 45%, the argument made above would seem to make logical sense. Nothing could be further from the truth.

Firstly, if the minimum wage were to be raised, unemployment would proliferate across the nation. In fact, this happens with any level of minimum wage: only people who can productively deliver labour above the rate of the set hourly rate will be employed - anyone below is ignored because it’s antithetical and financially unsustainable for employers. To use the poll as an example, if the minimum wage were to be increased to the more extreme $12 an hour, how on earth are small businesses and start-ups meant to pay for and sustainably employ low-skilled labour that isn’t worth the $12 an hour? Large corporations can usually afford the extra burden but small businesses can’t, which decreases market competition. 

Take, for example, Puerto Rico which in the 1970s was subject to the U.S. federal minimum wage laws, which mandated a substantial increase in the minimum wage to match the mainland U.S. levels. Many businesses in Puerto Rico, especially in manufacturing and agriculture, operated at much lower productivity levels than their mainland counterparts. In 1974, before the wage hike, Puerto Rico’s unemployment rate was around 10%. By 1980, after the federal minimum wage had been fully applied, the unemployment rate had surged to around 20%. During the 1970s, over 500,000 Puerto Ricans migrated to the U.S. mainland, particularly to New York, Florida, and other states with better job prospects.

Another common fallacy regarding the minimum wage is that, in order to combat high prices, the government must raise it. Again, has there actually been any consideration that maybe the minimum wage itself raises prices? When you guarantee a labour pool a set amount of income, prices will rise in response. If the minimum wage were to be removed or lowered, the same would happen with consumer prices. There wouldn’t be this issue if greedy politicians didn’t exact so much control over the market; that’s without mentioning that the federal minimum wage is completely unconstitutional. 

It would also be a good time to mention that currently, the US has a huge trade deficit.  In 2024, the United States experienced a sharp increase in its trade deficit with it reaching $918.4 billion, marking a 17% rise from 2023. This was driven by a record goods deficit of $1.2 trillion, while the services sector maintained a surplus of approximately $293 billion. If the US wants to decrease its dependability on foreign countries for goods and services, why not at least consider to decrease the minimum wage? From that, the labour market will increase and American’s can buy more homegrown and homemade goods, whilst simultaneously decreasing its trade deficits.

Many will postulate that abolishing or even lowering the minimum wage is completely nonsensical and completely disregards workers. Well, as mentioned, it quite clearly doesn’t help address the employment of low-skilled workers to start their way up the labour ladder. Moreover, the minimum wage incurs a baseline cost on employers - meaning that the chances of employees receiving a promotion, wage rise or a reward for their good work is greatly diminished, particularly small businesses. In certain circumstances, an employer who can only afford to employ a handful of workers on the minimum wage, some providing a higher level of output than others, won’t be rewarded for their utility and good work. So then - how does the minimum wage improve the standards for workers? Sure it guarantees a level of pay for those who are skilled, but what about some of the cases aforementioned?

These are just a few of the inconsistencies that become blatantly apparent when you start to pry into the heart of the issue at hand. One thing is for definite though: the minimum wage certainly won’t be abolished or even lowered for quite some time, most likely - quite the contrary.