How Raising the Minimum Wage Could Affect Your Wallet

Apr 27, 2021

Since 2009, the national minimum wage has been $7.25 an hour (or about $15K a year, before taxes, assuming 40-hour workweeks...and no weeks off). Read: not enough to cover basic bills, even in states with the lowest living costs.

Lawmakers across party lines agree it should be higher. But how much and the best way to do it has been up for debate.

Whichever plan makes it through, raising the minimum wage has consequences beyond workers hoping for a bigger paycheck. Here’s how it could affect your wallet.

If you're thinking about your budget...

  • Plan to spend more on everyday purchases. Maybe. Businesses with a lot of minimum-wage workers – think: restaurants and retailers – will have to adjust to paying employees more. And may look for that money to come from somewhere besides their cash registers. Such as your wallet. Good news: those price hikes may be pretty small.

If you're in the market for a new job…

  • Prep for more competition. When the minimum wage goes up, some research has pointed to less job-hopping and older people working longer. Pro tips: stand out from the hiring pool by always having an updated resume, networking virtually or IRL with pros in your field, and keeping your skills sharp (or learning some new ones). 

If you're wondering how this affects the economy...

  • It could get a boost. Depending on who you ask. Fans of a higher minimum wage point out that a chunk of the workforce earning more = more disposable income to boost consumer spending, a major driver of economic growth.

  • Or it could suffer more job losses. Critics of raising the minimum wage too high or too fast say higher prices won’t be enough to offset lower profits for small businesses. Meaning you could see your fav local cafe, brewery or boutique struggle to stay afloat. Or resort to cutting jobs.

theSkimm: Some say raising the minimum wage is a great move for workers and the economy overall. Others say ‘eh, it's complicated.' While lawmakers debate the details, give your savings account and resume a little extra attention. So that no matter what they decide to do, you're ready.

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Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus