There has been a lot of talk about raising the minimum wage. The public needs to keep in mind that raising the minimum wage can have a lot of negative effects on the economy.
It can cause distortions in the labor market and lead to higher unemployment for low-skilled workers.
Also, it encourages companies to replace labor with capital.
For example, it can cause mechanization in the long run and raise the cost of goods and service.
Raising the minimum wage would also have a disproportionate effect on small businesses and on poorer communities, which would lose one of their competitive advantages when it comes to attracting businesses.
If politicians are truly interested in helping the poor, instead of raising minimum wage, they should look at a full scale negative income tax, improving the educational systems in the United States and adopting economically sound policy that prompt development.
In the long run, the poor would benefit more from these kinds of changes than from raising the minimum wage
Robert MW Stanford