Why don’t we just raise minimum wage?

A question from Yahoo! Answers:

Why don’t we just raise minimum wage to $15 dollars an hour?

That way everyone will have a decent income and no one will be on welfare and take advantage of the system.

Your proposed solution will lead to the exact opposite of what you hope to achieve — more people than ever will go on welfare and won’t get off it for the rest of their lives.

There are plenty of businesses out there that only hire unskilled workers because they are cheaper than machines. If you raise minimum wage to $15, machines will become a VERY attractive alternative to workers. So where you used to have 20 people working for $10/hour, you will have one worker making $30/hour servicing a bunch of machines that actually do the work. And the 20 people who used to work for $10/hour will all be out of work permanently.

In fact, this is exactly why unions favor higher minimum wage, even though the vast majority of their members earn far more than minimum wage; jobs that are created in response to higher minimum wages are usually higher-paying and require some training (and are thus more likely to be union), although there are far fewer of them.

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