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Raising the minimum wage has never been a good idea. Some may argue that raising the minimum wage does no harm, but only helps out those at the bottom. Sure, on the surface it may look like that, but that isn't what's really happening.

When you raise the minimum wage, everything goes up. Let's use an imaginary company and wage scale. Say Sam works at XYZ. He's an ok worker, and he makes $8.00 an hour, the minimum wage. Jane also works at XYZ. She's a little better at her job than Sam, and she makes $8.50 an hour. Lois is a really good worker and she makes $9.50 an hour. Are you with me so far? Good. If the minimum wage jumps from $8.00 an hour to $8.50 an hour, Sam the average worker is now making the same as Jane the better worker. Jane isn't going to accept this, so she wants a raise to reflect the fact that she's a better worker than Sam (and rightfully so). Ok, now that Sam is making $8.50, Jane is making $9.25 and poor Lois gets no raise, even though she is a really good worker. She's not going to stand for this either, she should get a raise too. Her $9.50 is bumped up to $10 an hour. Now all the employees are happy because they all got a raise!

Where does all this money come from? The Magic Money Tree? No, it comes from Mr. Jones, the owner of XYZ. Before the wage hike, Mr. Jones was paying these three employees $1,040 a week. After the hike, he was paying $1,110 a week. This is only $70. Not much, but this is only three employees. Mr. Jones has 24 workers in his store. That means he's paying about $1,470 more a week than before. More than likely, this means he'll simply raises his prices to absorb this extra cost.

Now lets expand this...a lot. A minimum wage hike doesn't just affect just XYZ company, it affects every company in the country. At every level. This means the price of goods and services across the board goes up. Bad news. Ready for more bad news? We don't just deal internally. We export our goods, too. Now this price increase affects other countries. Now everything costs more! How are our working poor going to afford the things they need? Well, I guess we could raise the minimum wage. Raising the minimum wage is one of the main reasons behind inflation (greed is right up there, too).

Learn more about this author, Mark Murphy.
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