The Case for a Higher Minumum Wage

A lesson in basic macroeconomics, and why we can’t trust corporations to play nice on their own

Nothing in the economy is as simple as one thing making another happen. Inflation is simply the value of the dollar becoming less, which raising minimum wage does affect. Inflation is caused by adding to the supply of money. Raising minimum wage helps circulate the money that typically pools at the top of the chain, thus increasing consumer spending, boosting the economy.

Low-income individuals tend to spend a higher percentage of their wealth (Engel’s Law), meaning that if their wages increase, they will have more to spend. This relationship leads to money circulating in the market rather than pooling in a savings account or under a mattress. With this basic concept in mind, we can safely assume that an increase in economic activity makes up for the inflation of currency in the long run. Studies even show that a higher minimum wage has no overall impact on restaurant and grocery costs.

While the minimum wage cannot rise indefinitely, it must increase at the same rate of inflation, which it hasn’t. The result? Economic stagnation and an increase in wealth and income inequality.