lobachevsky on Raise the minimum wage

There is a crucial struggle in the debate about raising the minimum wage between the amount of money earned at a job and the amount of job opportunities in America. The essential effect of raising the minimum wage seems obviously to be that people get paid more. However, this is not the only effect. Employers have a budget. They have a balance between how many employees they need to provide satisfactory service, and how much they can afford to allocate to paychecks. Should the minimum wage increase, then the number of employees that the owner can afford to hire to stay in his budget decreases. So he faces the decision of whether he should lay off some of his employees or raise his prices. Looking at the big picture, essentially as the minimum wage increases the number of jobs in america decreases. There are many benefits to raising the minimum wage, but it all comes down to each individual's prioritys and a basic understanding of supply and demand.

One can look at Santa Fe, New Mexico and make an argument that raising minimum wages helps to stimulate the economy. It gives people more money to spend, so they circulate that extra money into stores. Those stores can then afford to hire the extra employees at the higher rate becaue they are getting more customers. It sounds like it would work anywhere, and it definitely does work in Santa Fe, BUT Santa FE has a very small middle class. Santa Fe, New Mexico primarily consists of those in the upper and lower classes. Also, as the minimum wage increases, prices increase as well. Those who cannot afford to pay the higher prices in Santa Fe do not have to travel far (just outside the city limits) to get the same merchandise at a lower price.