President Barack Obama proposes to raise minimum wage

During the State of the Union Address, President Barack Obama announced that he proposes to raise the federal minimum wage from $7.25 to $9.00 per hour. Obama predicts that by tying minimum wage to inflation, it too should also rise along with the cost of living.

Raising the federal minimum wage, may sound appealing to those who earn these wages, but by putting more money into the pockets of Americans, companies are losing more money because they are having to spend more money to pay their employees, which in turn, those companies will have to raise their prices to keep a profit. It isn’t a grand idea to raise minimum wage if the cost of products rises as well. America will be in the same downward economic spiral she is in now.

Although raising minimum wage has its downsides, there are some benefits to it. According to Obama’s plan families who earn a household income of $20,000 to $30,000 will notice a $3,500 increase in pay. Which in an economy like this, that spike in income could mean the difference of one day not being able to put food on the table.

If minimum wage was to rise so would the cost of living. If minimum wage were to stay the same there would be no reason for prices to increase based on that factor. Granted there are hundreds of other factors that come into account when pricing goods, not increasing minimum wage would be one fewer factor to take into account.

Companies that will be forced to raise their workers’ wages will actually lose money, and they will have to raise their prices on the products or services they offer. If the minimum wage was to stay the same, then the cost of living would not rise as drastically. If there were a way to put more money into Americans’ pockets without raising the cost of living, then that would be extraordinary, but until then, raising the minimum wage would drastically increase the prices of goods and services.