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I just received a raise. Before you congratulate me, let me say that I didn't want it. At least not the way I received it.

The state of Arkansas just increased the minimum wage by about a dollar. The reasoning was to economically "help" the lower class people of my state. This seems to be a general attitude about the minimum wage laws...that it helps the poor. Take from those greedy businessmen and give to the starving lower class (including myself, mind you).

Unfortunately, business owners, unlike the Hollywood clich, aren't rolling in cash. Most business owners are small business owners. They have a mom and pop store and are just trying to make a living. They, like most of America, are just trying to make ends meet.

When the minimum wage laws go up, these mom and pop stores suddenly have more costs. They aren't magicians. They can't print more money like the government can. They have to get the extra-money to fund the new costs somehow.

And it's the "somehow" that debunks The Minimum Wage Myth. There are three basic ways that businesses are able to offset the new costs imposed by a minimum-wage tax-hike.

1. Business owners cut back on personal costs
Let's say that the small business owner decides to eat out less, to cancel out the increase in other costs. Guess what industry is harmed? The restaurant industry. It's the domino affect. The less money businesses make, the less money other businesses make. The higher unemployment gets. The poor suffer.

When people "eat out less" or start to carve their spending habits because, well, they're money has been taken by Washington politicians, our economy slows down. With less money being spent, more people have less money throughout the year. The entire economy is weakened.

Granted, the third option (business owners cut back on personal costs) isn't going to be incredibly huge, given the fact that the employees affected by the minimum-wage tax increase will have more money to spend. So in a best case scenario, the benefit that is supposed to come from the increased minimum wage is utterly canceled out.

End Result: The "advantage" of the minimum wage tax is canceled out.

2. Businesses raise prices
The increased minimum wage means increased expenditures. One way of fixing the balance is not to cut costs, but to increase income. One way of doing that is by "slightly" increasing prices.

With slightly increasing prices, consumers endure the brunt of the negative impact of the minimum wage laws. Guess what economic class is harmed

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