How Raising the Minimum Wage Could Affect Your Wallet

Published on: Jul 8, 2019fb-roundtwitter-roundemail-round

Whether to raise the federal minimum wage to $15 an hour has been debated more than whether Ross and Rachel were actually on a break. Read: a LOT. That’s because the decision has consequences for way more than just the workers hoping for a bigger paycheck. Here’s how it could affect your wallet.

Prices might go up. Like on your A.M. bacon-egg-and-cheese. Businesses with a lot of minimum-wage workers — think: restaurants and retailers — will have to dig deep in their pockets to pay employees more. And may start looking for that money to come from somewhere besides their cash registers. Such as your pocket. Good news: those price hikes may be pretty small.

The economy could get a boost...or not. Fans of a higher minimum wage point out that when a chunk of the workforce earns more, there’s more disposable income to go around. That increases consumer spending, which is a good thing for the economy. Critics of raising the minimum wage say that’s not the whole picture. And that higher prices won’t be enough to offset lower profits for small businesses. Meaning you could see your go-to cafe, brewery, or boutique struggle to stay afloat. Or cut jobs. Which is not so great for the economy.

It might be tougher to get a new job. Right now, unemployment’s near record lows. Meaning companies are having to work harder and pay more to attract top talent. That’s good news if you’re ready for a new job or lobbying your boss for more money. But when the minimum wage goes up, some research has pointed to less job-hopping and older people working longer. Meaning the job market could start to shift toward having fewer jobs and more employers the upper hand again. Goodbye, sweet negotiating leverage.

theSkimm: Some say raising the minimum wage is a great move for the economy. Others say ‘not so much.’ Expect to hear a lot more about this as the 2020 campaign trail heats up. In the meantime, give your savings account a little extra attention. So that no matter what, you won’t have to sweat any small differences in your budget.