A minimum wage, which sets the lowest legal wage a company can pay its workers, is designed to prevent exploitation. Its backers argue the pros, including guaranteeing low-income workers a liveable wage, outweigh the cons. But who really benefits from a legally mandated minimum wage?
The minimum wage reduces government spendingShow moreShow less
Governments can reduce spending on social safety nets when employes are forced to pay a national minimum wage.
A large part of the government's budget is spent on social programs providing support for those who financially struggle.
If workers are paid a reasonable living wage there will be a reduced need for social programs to help low-income people. This means government spending can be reduced on safety nets and can be redirected to other areas.
A large portion of low-income workers receives federal funding through social welfare programs. They need this support to supplement their job earnings since the minimum wage is not enough to support them or their families. If the minimum wage were enough to support low wage earners financially, they would not need to rely on this governmental assistance.
Minimum wages that are effective and high enough to support living costs reduce the number of people who need to rely on social welfare programs, therefore saving the government money that can then be invested in other beneficial ways.
Introducing or raising a minimum wage would also increase unemployment and inflation. This would raise government spending on safety nets as a larger share of the population entered unemployment and purchasing power declined.
[P1] Governments spend money on social programs to lift citizens out of poverty.
[P2] A minimum wage lifts citizens out of poverty through increased private-sector spending.
[P3] With fewer citizens living in poverty, the government would spend less on social safety nets.
Rejecting the premises
[Rejecting P2] Minimum wages increase unemployment and inflation, doing little to improve poverty rates.